Results of the Basel III monitoring exercise as of 31 December 2012

by Sabrina I. Pacifici on September 26, 2013

“This report presents the results of the Basel Committee’s Basel III monitoring exercise. The study is based on the rigorous reporting processes set up by the Committee to periodically review the implications of the Basel III standards for financial markets. The results of previous exercises in this series were published in March 2013, September 2012 and April 2012. A total of 223 banks participated in the current study, comprising 101 large internationally active banks (“Group 1 banks”, defined as internationally active banks that have Tier 1 capital of more than €3 billion) and 122 Group 2 banks (ie representative of all other banks). The results of the monitoring exercise assume that the final Basel III package has been fully implemented, based on data as of 31 December 2012. That is, they do not take account of the transitional arrangements set out in the Basel III framework, such as the gradual phase-in of deductions from regulatory capital. No assumptions were made about bank profitability or behavioural responses, such as changes in bank capital or balance sheet composition. For that reason, the results of the study are not comparable to industry estimates. Data as of 31 December 2012 show that shortfalls in the risk-based capital of large internationally active banks continue to shrink. The aggregate shortfall of Common Equity Tier 1 (CET1) capital with respect to the 4.5% minimum has narrowed to €2.2 billion, which is €1.5 billion lower than on 30 June 2012. At the CET1 target level of 7.0% (plus the surcharges on G-SIBs as applicable), the aggregate CET1 shortfall for Group 1 banks is €115.0 billion, which is €82.9 billion lower than previously. As a point of reference, the sum of after-tax profits prior to distributions across the same sample of Group 1 banks during 2012 was €419.4 billion.”

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