Biggest banks to face tougher debt limits to end too-big-to fail
April 6, 2016 by John Glover
Global regulators are considering how to raise capital requirements for the world’s biggest banks as they implement tougher debt-financing limits designed to rein in too-big-to fail lenders.
The Basel Committee on Banking Supervision already imposes higher capital ratios on the 30 largest global banks, led by JPMorgan Chase & Co. and HSBC Holdings Plc, based on the riskiness of their businesses. The committee is now seeking feedback on a surcharge to the so-called leverage ratio, which is based on the size of balance sheets, without consideration of risk. The charge could be made a hard minimum requirement that mustn’t be broken, or designed as a buffer, which can be temporarily breached in times of crisis.
“One way to maintain the relative roles of the risk-based ratio and the leverage ratio in the regulatory capital framework would be to introduce a higher” leverage ratio for global systemically important banks, it said in proposals published on Wednesday. Click HERE to read more…
