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Published: 25th March 2017 by William Webster
The following is an introduction to bank regulatory capital. This is the amount of capital that the authorities require a bank to hold. It’s a complex topic and has a lot of interested parties. They include banks, taxpayers, regulators and politicians. That’s because increased capital reduces risk but costs banks and potentially may lead a slowdown in the growth of credit.
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6th October 2020
Capital adequacy is right up there in terms of importance and quite rightly too as it’s a measure of the ability to absorb losses. What’s a lot harder to nail down is the way we manage the interest rate risk on capital and that is what this article addresses.
8th October 2009
In the esoteric world of financial markets why is leverage so important? Because for banks it's the very thing that can increase the magnitude of profits. That's very attractive if your remuneration is linked to these profits. But excessive leverage increases the probability of bankruptcy. The cost of which is not borne by those who benefit in the good times. Few would dispute this is a conflict of interest. The problem is that restricting leverage is notoriously difficult. There is a world of difference between reported leverage and real leverage. Let's see why.
26th February 2013
This explains the role of the PRA in the regulatory regime. The approach is clear. Systemic stability and depositor’s protection is crucial. But this is not a zero failure regime. Boards should note the focus on the governance of risk.