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The Basel Committee on Banking Supervision’s decision to widen the range of assets eligible for the Liquidity Coverage Ratio, cut the amount of assets required and delay full implementation is positive for the banking industry and a victory for lobbyists. Banks can now breathe a sigh of relief. But let’s not pretend these changes will do much to help the wider economy.
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With Basel III just two years away, the syndicated loan market is running out of time to face up to the increased costs of the Liquidity Coverage Ratio. Lenders and borrowers watching developments know they must, as they have done before, adapt or die.
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Curing or preventing bank runs with liquid assets is a well-meant, fine idea. But the Basel Liquidity Coverage Ratio is like having an extra bucket of water to pour into an emptying bath. When liquidity starts to drain away, only central banks can put back the plug.
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With European policymakers calling off final discussions to CRD IV and CRR, lenders end 2012 with just as little clarity around new capital rules as they began. But, happily, the year has been about much more than a waiting game for banks.
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Fresh confusion about new tier two structures shows that the debate over the rules for new bank capital has gone on much too long. It’s time for policymakers to nail down the legislation.
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Local Russian banks now see VTB and Sberbank as international players, somewhat removed from their world. At the same time, international banks still do not consider them a real threat. The truth is that both sets of rivals should be worried.
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Throughout this year the credit curve has flattened, forcing investors to chase anything offering a decent spread. But this mood cannot possibly last through the whole of next year. That's why challenged issuers should waste no time in accessing the market while they still can.
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Barclays’ new tier two write down instrument was supposed to set a template for other UK banks to follow. Its soggy secondary performance has made it an easy target, but a better gauge of real investor interest in UK Cocos will be where it trades in the medium term.
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A global trade repository for all securities lending transactions is part of the Financial Stability Board’s plans to overhaul shadow banking. There would be knock-on benefits for the industry too.
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Conrad Baker has taken a rather topsy turvy approach to the upcoming Yuletide festivities. The former Deutsche Bank MTNs impresario, who is heading to Nomura to join its SSA syndicate, is planning a pretty big treat for himself between Christmas and New Year — starting his new job.