From the Regulators

91% of larger banks, and 96% of smaller banks meet existing liquidity coverage ratio requirements

By James Langton |

Global banks are now meeting the new, tougher capital requirements that are being adopted in the wake of the financial crisis, according to a report published on Tuesday from the Basel Committee on Banking Supervision regulators.

The report examines the compliance of the world's large internationally active banks with the new capital requirements, known as Basel III, that were developed to enhance both the quality and quantity of capital held by the banks in response to the financial crisis.

According to the report, all of the banks surveyed now meet Basel III minimum capital levels of 4.5%, and the target requirements of 7.0% under the new rules.

Additionally, the so-called global systemically-important banks (G-SIBs) now all meet the fully phased-in liquidity requirements that apply to these firms under Basel III.

GSIBs are still a combined €116.4 billion shy of meeting the requirements for total loss-absorbing capacity (TLAC), the report notes, which is down from €318.2 billion in mid-2016.

The TLAC requirements don't take effect until 2022 however, so banks still have plenty of time to build up these buffers. The minimum capital requirements under Basel III are to be fully phased in by the start of 2019.

In terms of the new liquidity requirements under Basel III, the regulators report that 91% of the larger banks, and 96% of smaller banks meet the existing liquidity coverage ratio (LCR) requirements, which are in the process of being phased in.

The LCR requirements are to be fully phased in by 2019 as well. And, it notes that 94% of larger banks and 88% of smaller firms are meeting the net stable funding ratio requirements.