Monday, 22 Nov 2010 08:26 AM
The new Basel III banking rules will leave the biggest U.S.
banks short of between $100 billion and $150 billion in equity
capital, with 90 percent of the shortfall concentrated in the
top six banks, the Financial Times said, citing research from
Barclays Capital.
The newspaper said the study by the investment banking arm of
Barclays PLC assumes the banks will need to hold top quality
capital equal to 8 percent of their total assets — a one point
cushion against falling below the effective global minimum of 7
percent set in September by the Basel Committee on Banking
Supervision.
The regulations mean banks may need to increase their capital
through retained earnings or issuing equity or they can cut
their risk-weighted assets by selling off assets and cutting
back riskier business.
"These shortfalls are entirely manageable ... The more difficult
question is what affect the new rules will have on the cost and
availability of credit and bank profitability," the FT quoted
Tom McGuire, head of the Capital Advisory Group at BarCap, as
saying.
McGuire estimates that U.S. banks can cut their equity needs by
$10 billion with each $125 billion reduction in risk-weighted
assets, the FT said.
Barclays Capital could not be reached for comment.
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