Bank Capital Needs Seen Soaring on Basel Market-Risk Review
- ISDA, GFMA and IIF respond to Basel's trading-book review
- Basel Committee intends to complete framework by year-end
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Banks’ capital charges for market risk in the trading book may increase by more than four times, crimping their ability to lend to small companies, if global regulators press ahead with proposed rule changes, according to industry groups.
“We’re concerned about the impact this will have on market liquidity and various bank business lines,” Mark Gheerbrant, head of risk and capital at the International Swaps and Derivatives Association, said in an e-mailed statement. “And the businesses that will be hardest hit will likely be those most important for the real economy, such as credit to small- and medium-sized entities, securitization and small-cap equities.”