WSJ: IMF Some Banks To Face Trouble With New Basel Rules

09:42CET

The International Monetary Fund warned that some investment banks and European banks generally could have trouble meeting new global liquidity requirements, which could prompt them to shift business to lightly regulated sectors and create new financial system vulnerability. The IMF report surveyed 62 large banks in North America, Europe and Asia and found that 10 wouldn't have sufficient retained earnings to meet the new common-equity capital ratio of 7% by 2019 when the standards are fully phased in. The rest could meet the standard, said IMF economists, by issuing new stock or cutting dividends.
The IMF didn't disclose the names of the specific banks.
Given the potential problem, the IMF paper urged continuing efforts to restructure or shut down weak banks, boost regulation of nonbank institutions, coordinate regulatory policies across countries and put in place cross-border resolution regimes to shut down or restructure problem banks whose operations span different countries.

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