Europe’s leading banks look generally well-placed to meet global standards on leverage to be implemented at the start of 2018, but compliance could be tested should regulators implement buffers for the biggest banks, according to data compiled by S&P Global Market Intelligence.
A sample of European lenders with over €100 billion in assets with available data showed that all had at least the 3% ratio of capital to total assets that the Basel III regime will require from 2018. All of the selected banks also posted double-digit common equity Tier 1 ratios, which measure capital as a share of risk-weighted assets.
Globally systemically important banks will have to go beyond the 3% Basel minimum, but the format and quantum of the additional requirement have yet to be finalized. Among the questions is whether banks will be set a higher minimum requirement or a buffer that would allow supervisors to impose restrictions in the event of a breach. The committee is also yet to determine whether the add-on will be uniform for all G-SIBs or scaled based on the "buckets" used to calculate similar surcharges for the CET1 ratio.
