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Response to Basel III leverage ratio framework revisions

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​Concerns raised by WSBI-ESBG include treatment of derivative exposures.









​​​​​​​BRUSSELS, 12 July 2016 – The treatment of derivative exposures, additional requirements for G-SIBs, credit conversion factors for off-balance sheet items and the treatment of traditional securitisation are concerns WSBI-ESBG have raised in their response to the BCBS consultation revisions to the Basel III leverage ratio framework. 

Submitted on 7 July, the WSBI-ESBG submission also shows that the leverage ratio is an important issue for its members. The savings and retail banking associations see the ratio discouraging investment in low-risk exposures unless the yield can be increased as the lack of differentiated risk weights in the leverage ratio calculation will increase the capital required for these exposures. A higher leverage ratio in Europe, for example, would counteract the general objective of strengthening a heterogeneous and diversified banking market structure in the region and disturb the transfer of credits to the real economy, particularly to well-performing small and medium-sized enterprises.

Background 

The response comes at a time when Basel Committee on Banking Supervision (BCBS) receives feedback from stakeholders as part of the launch on 6 April consultation around the proposed revisions to the framework originally introduced following the financial crisis. The proposed revisions included options for the treatment of regular-way purchases and sales of financial assets designed to ensure consistency across accounting standards. 

Eager to receive comments on all aspects of the proposals, BCBS showed particular interest in relation to matters in this consultative document on which the BCBS specifically sought views and additional information. Prior to finalising the Basel III leverage ratio framework, the BCBS will evaluate appropriate implementation arrangements and will provide sufficient time for implementation, taking into account the range of related reforms that have been, or are due to be, agreed by the Committee. In addition to the BCBS work on the leverage ratio the EBA are expected to publish their leverage ratio calibration report this month. All submitted comments are available on the Bank for International Settlements website.

>> WSBI-ESBG general position on the leverage ratio


Leverage ratio; Basel III; SME finance