Banks’ pushback against ‘Basel Endgame’

April 08, 2024
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Banks’ pushback against ‘Basel Endgame’

The pushback from US banks against the proposed stricter banking rules stems from concerns about the potential impact on their operations and profitability.

The proposed regime, which is more stringent than the globally agreed standard, could require banks to hold more capital to cover their risks, potentially reducing their ability to lend and generate returns for shareholders.

The debate over risk-weighted assets (RWA) is at the center of the regulatory battle, with regulators and banks grappling over how to accurately assess the riskiness of banks’ assets. The calculation of RWAs plays a crucial role in determining banks’ capital requirements and overall financial health.

The ongoing disagreement reflects broader tensions between #regulators seeking to strengthen the financial system and banks looking to maintain profitability and competitiveness in a challenging market environment. The outcome of this regulatory clash will have significant implications for the banking industry and the broader economy.

https://www.ft.com/content/48555d55-ca6d-4ab8-ae29-aba4d4f10f13

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