The world’s big banks are continuing to make progress at beefing up their post-crisis capital positions to meet the tougher requirements set under the capital adequacy model known as Basel III, regulators report.
According to a new report from the umbrella group of global banking regulators, the Basel Committee on Banking Supervision, the large global banks covered by Basel III are continuing to build up their capital and liquidity positions.
The committee reports that all of the so-called group 1 banks — defined as internationally active banks with at least €3 billion in Tier 1 capital — are meeting the initial Basel III capital requirements, which were phased in as of January.
The banks’ combined shortfall from the final Basel III requirements (which will be fully phased in by 2027) is €30.1 billion, based on data to June 2018, the report says.
The committee also reports that banks are moving toward meeting their total loss-absorbing capacity (TLAC) requirements, which will be fully phased in by 2022. Currently, the banks’ collective shortfall in TLAC capital is €68 billion, down from €82 billion at the end of December 2017.
Finally, the Basel Committee report indicates that banks are meeting their liquidity requirements under the Basel III regime.
It notes that the global banks’ liquidity coverage ratio (LCR) has improved slightly. The weighted average LCR is 135% as of June 2018, up from 133% at the start of 2018.
The other liquidity metric introduced under Basel III, the net stable funding ratio (NSFR), was unchanged from its prior assessment at 116%, the committee reports.