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Change to definition of capital affects bank capital shortfall, says regulator 

September 18, 2015


Regulator the European Banking Authority (EBA) has said that changes to the definitions of capital and the way that assets are measured mean that the biggest international banks would fall €1.5 billion short of required capital levels if rules were fully implemented.

The EBA has published its twice-yearly report on the amount of capital that banks hold relative to their risk-weighted assets, looking at data to 31 December 2014. Under Basel III regulations put in place following the 2008 banking crisis capital must not fall below 4.5%, but the shortfall threshold would be 7% if the Basel III regulation were fully implemented.

The common equity tier 1 capital ratio (CET1) of the largest internationally-active banks would meet the current requirement but not the 7% requirement under full implementation of the rules.

Read more: Out-Law

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