The Basel Committee and the European Banking Authority (EBA) have published their latest monitoring of how banks are performing against the fully phased-in Basel 3 (or CRR/CRD4 in Europe) capital, leverage and liquidity standards, using data at end-2015.
The table below summarizes the main results. Almost all major banks meet the minimum CET1 capital and leverage ratios. However, some banks still need to make further progress if they are to meet the forthcoming 100% minimum LCR (by 2019 under the Basel standard and by 2018 under EU rules) and NSFR requirements (by 2018). One bank in the Basel (not EBA) sample has an alarmingly low LCR of only 35%, well below the transitional minimum requirement of 60% for 2015, which rises to 70% in 2016.
|Basel Group 1||Of which Basel G-SIBs||Shortfalls||EBA Group 1||Shortfalls|
|Sample||100 large internationally active banks||45 internationally active banks with tier 1 capital in excess of EUR 3 billion|
|CET1 ratio||11.8||11.7||None||12.4||Very small remaining shortfall.|
One bank with an LCR of 35%.
Most (86%) banks already above 100% LCR.
Lowest G-SIB at 110%
All banks meet LCR of 70%.
Three do not meet 100%.
Lowest at 82%
20% of banks below NSFR of 100%.
Lowest at 82%.
Lowest G-SIB at 90%.
40% of banks below NSFR of 100%.
Lowest at 79%
It may be observed that:
“Basel 4” may in due course reveal significant shortfalls that are not covered in the Basel and EBA exercises:
So, this is a pure Basel 3 exercise that makes no allowance for what we are calling “Basel 4”.