The Bank for International Settlements (BIS) has highlighted “heterogeneity” in the way supervisors apply prudential requirements (regulatory buffers, additional own funds, non-binding guidance) to large international systemic banks, in a report analysing the composition of the own funds of 29 major banks over the period 2014-2025 and published on Wednesday 8 July.
According to the BIS, the differences in required capital ratios also stem partly from banks’ different levels of systemic importance. And the analysis also highlights “significant heterogeneity in the computation of risk-weighted assets” (RWA). Certain elements suggest that “differences in capital ratio requirements may compensate for different degrees of conservatism in RWA computations [among supervisors]”, the international financial organisation notes.
According to its authors, one of the report’s main strengths is that it presents the different components of the overall own funds requirements for large systemic banks and “analyses the factors likely to explain the differences observed”. “While banks are required to publicly disclose key information on capital requirements, the information is generally not available in a centralised, consistent and machine-readable manner”, they note.
See the BIS report: https://aeur.eu/f/mv9 (Original version in French by Mathieu Bion)