Markets reacted well to the final Basel III rules published in December, with bank share prices rising and analysts cutting their calculations for the additional capital requirement across the sector.
Bankers Euromoney spoke to welcomed the nine-year phase in for the 72.5% output floor below which they will not be allowed to use internal risk models to cut risk-weighted assets (RWAs) as they would otherwise be determined by the blunt standardized approach.
The good news is greater risk sensitivity now coming into the standardized approach, notably around corporate credit on the cusp of investment grade and unsecured SME exposures.
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