viernes, 18 de septiembre de 2015

viernes, septiembre 18, 2015


Banks Hit Capital Targets But More Will Be Needed

Banks have raised $1.9 trillion but capital calls not done

By Paul J. Davies


Big banks have bolstered their defenses, but they still have fixing up to do.


Across the globe, banks are hitting their capital targets, according to the Basel, Switzerland-based committee that sets global rules. Only a handful of small banks have a slight shortfall.

However, some troubling characteristics still suggest investors will have to wait longer for banks to finish repairs and become predictable, attractive stocks.

The very biggest banks—the global systemically important banks—are still most highly leveraged, while all banks still hold zero capital against large books of government bonds.

Also, in spite of fears about the growth of shadow banking, there has been no reduction in traditional bank assets. In fact, since mid-2011 total assets have grown 7%-12% at large banks.

Banks have replaced some risky assets with less risky ones, which helped capital ratios, but the main way they have hit targets is by raising equity. Most of the €1.7 trillion in capital raised has gone to the biggest banks.

And yet, global systemic lenders still have fewer euros or dollars of capital set against assets than their smaller rivals. On average their capital ratios are 10.8%: other banks have ratios above 11%. This is despite the fact that systemic banks have much higher capital targets to hit.

One sign that even more equity will be needed is the amount of government debt all banks still treat as risk free: almost half of the liquid assets that banks are required to hold—or €5.2 trillion—are government backed securities with no capital requirements.

Rules on treating government debt as risk free are, unsurprisingly, set to change: that means more pain for bank investors.

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