Basel Committee 'Expects' Banks to Fall Below Requirements in Crisis
Tweet
Share
E-mail
So what are the rules for then? Or were the rules specifically designed to do this?
According to reports Monday, banks will be allowed to travel outside (read: below) minimum liquidity levels set by global regulators should another financial fiasco occur.
The governing board of the Basel Committee on Banking Supervision said that banks are expected to fall below set capital requirements as they tap into their pool of liquid assets.
One of several measures to be implemented by regulators is the liquidity coverage ratio, which is aimed to ensure that banks have enough assets able to readily liquidated should the need to survive a 30-day credit squeeze come into play.
Some also speculate that banks will avoid drawing-down liquidity buffers, as a sign of weakness, disrupting shareholder confidence in the process.
There have been advocates against the new rules, such as voiced by JPMorgan (NYSE: JPM) CEO Jamie Dimon. Dimon said banks should be able to use their own models and assess how much capital they need to hold.
Investors might want to keep an eye on others like Bank of America (NYSE: BAC), Citigroup (NYSE: C), and Morgan Stanley (NYSE: MS) as the rules and regulations pan out in the coming months and years. In particular, BofA, who's CEO Brian Moynihan hasn't been as specific as some on the amount of capital BofA will be able to retain, or whether it will be able to meet capital requirements when due.
Banks finished largely higher Monday.
According to reports Monday, banks will be allowed to travel outside (read: below) minimum liquidity levels set by global regulators should another financial fiasco occur.
The governing board of the Basel Committee on Banking Supervision said that banks are expected to fall below set capital requirements as they tap into their pool of liquid assets.
One of several measures to be implemented by regulators is the liquidity coverage ratio, which is aimed to ensure that banks have enough assets able to readily liquidated should the need to survive a 30-day credit squeeze come into play.
Some also speculate that banks will avoid drawing-down liquidity buffers, as a sign of weakness, disrupting shareholder confidence in the process.
There have been advocates against the new rules, such as voiced by JPMorgan (NYSE: JPM) CEO Jamie Dimon. Dimon said banks should be able to use their own models and assess how much capital they need to hold.
Investors might want to keep an eye on others like Bank of America (NYSE: BAC), Citigroup (NYSE: C), and Morgan Stanley (NYSE: MS) as the rules and regulations pan out in the coming months and years. In particular, BofA, who's CEO Brian Moynihan hasn't been as specific as some on the amount of capital BofA will be able to retain, or whether it will be able to meet capital requirements when due.
Banks finished largely higher Monday.
Create E-mail Alert Related Categories
Insiders' BlogRelated Entities
JPMorgan, Citi, Morgan Stanley, Jamie DimonSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
