The new rules will force banks to hold top-quality capital equal to 7 per cent of their risk-bearing assets, more than triple than current standards, so they can better withstand economic downturns and financial shocks.
Banks will have until 2015 to meet the minimum core Tier 1capital requirement, which consists of shares and retained earnings worth at least 4.5 per cent of assets. An additional 2.5 per cent “capital conservation buffer” will have to be in place by 2019.
Leaders from the Group of 20 developed and emerging nations are set to endorse Basel III when they meet in Seoul in November. Implementation will be left to each country.
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