FT: Basel III reforms to hit investment banking arms
30 September 2010
New research from Morgan Stanley shows that UBS will see its risk-weighted assets rise 60 per cent, Barclays’ will jump 44 per cent and Credit Suisse’s will rise by 31 per cent under two sets of rule changes recently approved by the Basel Committee on Banking Supervision.
The Basel group agreed last year to increase the risk charges for bank trading books, which takes effect at the end of 2011, and it did the same for securitisations and other structured products as part of the larger Basel III reform package.
The recent financial crisis revealed that the previous set of rules left banks desperately short of equity and other capital when losses in those areas began to multiply.
Overall, the big European wholesale banks will see their risk-weighted assets rise 24 per cent, Morgan Stanley calculated.
US banks do not make as much detailed information available but JPMorgan recently said its risk-weighted assets would rise from $1,100bn to $1,400bn, or 24 per cent by the end of 2011 after the rule changes.
© Financial Times
