The target capital shortfall for the world’s biggest banks is shrinking, although they are slightly further from meeting minimum capital requirements, and smaller banks have seen their capital shortfall increase, too, according to a new report from the Basel Committee on Banking Supervision.

The group of global banking regulators released the results of their latest efforts to examine banks’ preparations for implementing the new Basel III capital regime. It looks at the capital positions of the world’s big banks assuming that the new Basel III requirements are fully implemented (however, the requirements won’t be fully in force until 2019).

Based on data as of June 30, 2013, the Basel Committee says that the aggregate shortfall for so-called Group 1 banks (which includes internationally active banks that have Tier 1 capital of more than €3 billion) from the common equity tier 1 target level of 7.0% (plus the surcharges applicable to systemically-important banks), is down to €57.5 billion, compared to €115.0 billion on December 31, 2012.

However, the committee also notes that the aggregate shortfall, based on the 4.5% capital minimum, has actually increased to €3.3 billion, up from €2.2 billion in the previous review.

Moreover, the capital shortfall for so-called Group 2 banks (banks with tier 1 capital of less than €3 billion) is estimated at €12.4 billion for the 4.5% minimum, and €27.7 billion for the target level of 7.0%. This represents an increase compared to the previous period of €1.0 billion and €2.1 billion, respectively, the regulators note.

The average tier 1 capital ratios under the Basel III framework is 9.5% for Group 1 banks and 9.1% for Group 2 banks, it reports. And, the average liquidity coverage ratio (LCR) for the Group 1 bank sample was 114%, which is down from 119% six months earlier, the committee notes (the initial requirement will be 60%, rising to 100% by 2019). For Group 2 banks, the average LCR has increased from 126% to 132%.

It did not report data on the longer-term structural liquidity standard, the net stable funding ratio (NSFR), which will also be imposed under Basel III.

A total of 227 banks participated in the latest study, comprising 102 Group 1 banks and 125 Group 2 banks.