Leverage rumpus: Banks protest impact of ratio revisions

Client clearing, repo markets, credit derivatives – the leverage ratio casts a shadow over them all. But the overarching complaint is that the ratio should remain a backstop, and it’s a point on which many regulators agree. Lukas Becker and Tom Newton report

risk1013-csfinal-stephen-lee

In modern cars, the airbag is the backstop – a safety measure that deploys when everything else has failed. In modern banks, the leverage ratio is intended to do something similar. But revisions proposed to the ratio in June would turn it from backstop into binding constraint, banks claim – overwhelming a battery of more sensitive safeguards, such as internally modelled risk-weighted assets (RWAs), and potentially making banks harder to manage. A bit like a car in which the airbag is permanently

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here