BASEL, Switzerland—More than 200 banks around the globe, including 111 large internationally active banks, are making progress in meeting initial minimum Basel III standards, a new report indicates.
The Basel Committee on Banking Supervision, has published its Basel III Monitoring Report as part of its semiannual process to monitor the dynamics and effects on banks of the Basel III capital, liquidity, and leverage reforms. The Basel Committee utilizes data collected by bank supervisors in the 27-member countries to determine the international regulatory banking framework Basel III’s impact on banks.
According to the Basel Committee, Group 1 banks are defined as internationally active banks that have Tier 1 capital of more than €3 billion and include all 30 banks that have been designated by the Financial Stability Board as global systemically important banks (G-SIBs). Additionally, the Basel Committee’s sample includes 95 “Group 2” banks (i.e. banks that have Tier 1 capital of less than €3 billion or are not internationally active, Forbes reported.
Increase In Ratio
The average Common Equity Tier 1 (CET1) capital ratio under the fully phased-in initial Basel III framework has increased slightly from 12.5% to 12.9% for Group 1 banks and more substantially for Group 2 banks, from 14.7% to 16.0% in comparison to June 2017 the previous reporting period. The Basel Committee found that all Group 1 and Group 2 banks, including all thirty globally systemically important banks would meet the CET1 minimum capital requirement of 4.5% and the CET1 target level of 7.0%, which includes the capital conservation buffer.
This target also includes the G-SIB surcharge where applicable but does not include any countercyclical capital buffers, Forbes reported.
Higher in Europe
The Basel Committee found that, presently, the Tier 1 capital ratios are higher in Europe than in the Americas and the rest of the world.
However, when compared with data starting from 2011, this relationship used to be reversed before 2014. The percent increase in capital since June 2011 “has tended to be lower in Europe than other regions, even though European banks raised more capital externally and their average risk-based capital ratios are higher than in any other region as of end-December 2017.”
In a positive development, risk-weighted assets have tended to fall for Group 1 banks in all regions over the second half of 2017, Forbes noted.