Basel Eyes Higher Reserves for World's Biggest Banks

To prevent a repeat of the financial crisis that started in 2008, the Basel Committee on Banking Supervision plans to force the world's biggest banks to hold as much as three percentage points more reserves than other lenders, says Bloomberg.


Citing people familiar with the matter, Bloomberg says the plan will bring the Basel group in line with the Switzerland's plans. The Swiss government has proposed raising the minimum common equity requirement for UBS and Credit Suisse to 10 percent from the 7 percent level set by the Basel committee.


While some support Basel's plan, others say that listing banks eligible for the surcharge would be based on spurious criteria, which, in turn, will create incentives to manipulate such lists for political reasons.


The Basel committee discussed the possible extra reserves at a meeting earlier this month, said the people familiar with the talks.


“Whether the surcharge will be meaningful or not depends on what types of instruments are eligible and the timeframe,” Matthew Clark, an analyst at Keefe, Bruyette & Woods in London, told Bloomberg.




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