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Fitch: Banks May Need More Capital to Cover Basel Step-In Risk 

December 24, 2015


The Basel Committee on Banking Supervision's proposals concerning step-in risk are most likely to have an impact on banks with large asset and wealth management, investment fund, and securitisation origination and sponsorship activities, says Fitch Ratings. The Basel Committee launched a consultation on 17 December 2015 to assess whether banks should hold capital specifically to cover the risk that they may be required to step in and provide financial support to non-bank financial entities at a time of financial stress, even in the absence of clear contractual obligations to do so. These additional capital requirements could prove onerous. This increases the likelihood that affected banks could lobby and resist the proposals. Banks with discretion over the assets they manage in their wealth management units would incur a capital charge because they might encounter higher step-in risks. Read more

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