The world’s big banks are now meeting the revised capital and liquidity requirements that were developed in response to the global financial crisis under the capital adequacy regime known as Basel III, according to a new report from the Basel Committee on Banking Supervision published on Tuesday.
The group of global banking regulators published the results of its latest review of the implementation of the Basel III requirements, which is based on data as of June 30, 2017. On a fully phased-in basis, all of the banks covered in the review meet both the minimum Tier 1 common equity requirement of 4.5% and the target requirement of 7%.
Nevertheless, there remains a shortfall in the total loss-absorbing capacity (TLAC) requirements that apply to the world’s biggest banks that qualify as global systemically-important banks (G-SIBs). The report notes that 10 of the G-SIBs have a combined TLAC shortfall of €109 billion as of June 30, 2017, which is down from €116 billion at Dec. 31, 2016. Those requirements aren’t slated to be fully adopted until 2022.
The review also covers bank data on the new Basel III liquidity requirements, which impose a liquidity coverage ratio (LCR) of 60% in 2015, rising to 80% in 2017 and 100% in 2019. The Basel Committee says that weighted average LCR for its sample of the world’s biggest banks was 134%. For the smaller banks in the review the weighted average LCR was 175%.
The review found that 99% of the biggest banks (including all G-SIBs) and all of the smaller banks have an an LCR of at least 100%.
The review covered 193 banks, including 106 large internationally active banks, and 87 smaller banks.