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Basel eyes higher leverage ratio 

January 20, 2014
Spencer Anderson and Christopher Whittall, IFR

Officials at the Basel Committee on Banking Supervision are pushing for a higher leverage ratio, despite recently giving banks some relief on the way the figure is calculated. While bankers were relieved to see the modifications announced last week, celebrations have been muted as the industry recognises that the minimum leverage ratio could be set higher than the currently proposed 3%.

On January 12, the Committee, following a consultation process, made adjustments to rules on derivatives and repo agreements, allowing netting with the same counterparty under certain circumstances, something that reduces the so-called “exposure measure” used to calculate leverage.

The rule changes are a boon for banks, which could consequently see a boost to supplementary leverage ratios of around 40bp, according to Nomura analysts. But while the industry may have won this battle, it may still lose the war, with senior bankers remaining fearful of a hike in the headline leverage number.

Read more: IFR

 
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