U.S. Banks Facing Capital Hole Get No Leverage Relief From Basel
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Global regulators weakened a proposed rule this month intended to keep banks’ borrowing in check. For eight of the biggest U.S. lenders, those changes won’t provide much relief.
That’s because the Basel Committee on Banking Supervision’s leverage standard is back to where it started four years ago after three rounds of revisions. With the latest changes in the definition of what counts as assets, U.S. firms will need to include more derivatives and fewer credit commitments. Those two adjustments cancel each other out, leaving the ratio of capital to assets for the eight companies almost unchanged.