Basel III capital ratios “largely stable” for largest global banks, BIS finds
06 March 2024 Switzerland
Image: AdobeStock/AdobeStock/bakhtiarzein
Basel III Capital ratios for the world’s largest banks during H1 2023 were “largely stable” and above their levels prevailing before the Covid pandemic, according to the Bank of International Settlement (BIS).
These assessments, based on the Initial Basel III framework, found that Tier 1 common equity (CET1) for the largest Global Systemically Important Banks (G-SIBs) had contracted from 13.0 per cent on 31 December 2022 to 12.7 per cent on 30 June 2023, with the CET1 ratio for Group 1 banks falling from 13.1 per cent to 12.9 per cent.
The weighted-average Net Stable Funding Ratio (NSFR) fell by 0.3 per cent to 124.1 per cent for the Group 1 banks and by 2.6 per cent to 124.0 per cent for the G-SIBs over this six-month period.
However, liquidity coverage had improved over this timeframe, with the Liquidity Coverage Ratio (LCR) for Group 1 banks rising from 137.3 per cent to 138.6 per cent, and from 134.4 per cent to 137.0 per cent for the G-SIBs.
Significantly, the BIS finds that profit after tax for large internationally active banks rose to a record €279 billion over the period.
With the final Basel III minimum capital requirements coming into play from 1 January 2023, the average impact of the fully phased in final Basel III framework was a rise of 4.9 per cent in Tier 1 minimum required capital (MRC) for Group 1 banks compared with +3.1 per cent for 31 December 2022.
Group 1 banks experienced a total regulatory capital shortfall of €4.0 billion on 30 June 2023, compared with a €3.0 billion shortfall at the end of December 2022, according to the recently released BIS Basel III Monitoring Report, March 2024.
These assessments, based on the Initial Basel III framework, found that Tier 1 common equity (CET1) for the largest Global Systemically Important Banks (G-SIBs) had contracted from 13.0 per cent on 31 December 2022 to 12.7 per cent on 30 June 2023, with the CET1 ratio for Group 1 banks falling from 13.1 per cent to 12.9 per cent.
The weighted-average Net Stable Funding Ratio (NSFR) fell by 0.3 per cent to 124.1 per cent for the Group 1 banks and by 2.6 per cent to 124.0 per cent for the G-SIBs over this six-month period.
However, liquidity coverage had improved over this timeframe, with the Liquidity Coverage Ratio (LCR) for Group 1 banks rising from 137.3 per cent to 138.6 per cent, and from 134.4 per cent to 137.0 per cent for the G-SIBs.
Significantly, the BIS finds that profit after tax for large internationally active banks rose to a record €279 billion over the period.
With the final Basel III minimum capital requirements coming into play from 1 January 2023, the average impact of the fully phased in final Basel III framework was a rise of 4.9 per cent in Tier 1 minimum required capital (MRC) for Group 1 banks compared with +3.1 per cent for 31 December 2022.
Group 1 banks experienced a total regulatory capital shortfall of €4.0 billion on 30 June 2023, compared with a €3.0 billion shortfall at the end of December 2022, according to the recently released BIS Basel III Monitoring Report, March 2024.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
