Basel III - in the ratatouille


#1

Basel III seems to be a big issue.

ftalphaville.ft.com/blog/2009/12 … -out-dtas/

Basel III consultation paper: bis.org/publ/bcbs164.pdf?noframes=1
Liquidity supplement: bis.org/publ/bcbs165.pdf?noframes=1


#2

From the consultation paper:

Executive summary:

You won’t find a more succint summary and damning conclusion.


#3

Raising the quality, consistency and transparency of the capital base


#4

Enhancing risk coverage

Bad news for the Anglo derivative book? Indeed for all the Irish banks?


#5

Supplementing the risk-based capital requirement with a leverage ratio


#6

Reducing procyclicality and promoting countercyclical buffers


#7

Addressing systemic risk and interconnectedness


#8

Introducing a global liquidity standard

I’ll drink to that…


#9

And now some snippets from the detail:

Regulatory capital (this is the key bit for Irish banks, I think, as it gives an idea of what recapitalisation to international standards is going to cost).

Tier 3 finally seems to be relegated to what it always was - junk.

Ah! This is bad news for a number of the US banks. They’ve kept their capital ratios up by shovelling shit into the open maw of Tier 3…

We’ll never see a lenny penny on those preference shares… xman, you still on for the barbie?

Holy shitola.

Blimey. Looks like the banks are only going to be allowed count ‘money’ as, eh, ‘money’! I see futures in used gum and navel lint are already way down…


#10

Lots more detail on risk measurement (particularly for counterparty risk) that is as opaque as the instruments themselves… for example:

Which basically means, I think, that they want to end mark-to-make-believe…

The blogosphere is going to have to find lots of new stuff to abuse banking accountancy practices if all the recommendations are implemented…


#11

Thanks for posting so extensively YM so a few idiot questions
Is Basel “law” proposals or a think tank.When will they be implemented, if they are would it lead to immediate nationilisation. Everyone seems to suggest that the New year will be the time that Bof I and AIB effectively are nationalised does Basel bring this closer.


#12

Derivatives…


#13

Off Balance Sheet


#14

Sometimes you have to wonder, though, if the BIS are up to the job:


#15

An end to bubbles?
Excessive credit growth


#16

Wasn’t Basle II one of the primary culprits of this mess? Third time lucky I suppose.


#17

My guess is that what they introduce will be so restrictive, it’ll force the unwind of the current mess. The whole world is going Japanese for the forseeable future if this happens. Not that I think it shouldn’t, but the pendulum swings…


#18

ftalphaville.ft.com/blog/2010/09 … denfreude/

Oops. I guess we’ll be a fair while waiting for dividends from the Irish banks…


#19

New rules are published:
ftalphaville.ft.com/blog/2010/09 … l-details/

So, what does it mean for the Irish banks?

Will the hydra have to meet these requirements?


#20

ftalphaville.ft.com/blog/2010/09 … inot-line/