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Basel IV Is the Buzzword as Europe’s Banks Brace for Costs 

August 10, 2015

Nicholas Comfort, Bloomberg Business

“Basel IV is coming.”

Laurent Mignon, chief executive officer of Natixis SA, sounded that alarm on July 31, referring to the mass of regulatory work in the pipeline at the Basel Committee on Banking Supervision. The issue was raised on more than a dozen other European banks’ earnings calls in recent weeks.

The coming changes -- primarily implementation and revisions of existing rules -- will increase the risk attributed to some assets, a key component in calculating capital requirements, the banks said. While most didn’t quantify the impact, Chief Financial Officer Marcus Schenck said Deutsche Bank AG’s risk-weighted assets will swell by about 100 billion euros ($109 billion) through 2019.

“The regulation largely isn’t set, so banks have used the opportunity to express their opinions and lobby for what they think it should look like,” said Jon Peace, an analyst at Nomura Holdings Inc. “It is probably going to take about two years until we get visibility on what people are calling Basel IV, so many banks will probably be compliant by then.”

Read more: Bloomberg Business

 
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