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Basel III phase-in begins to bite

30th July 2013. The PRA updated its statements on bank and capital leverage ratios to include Barclays. A brief summary of 2013 statements to date:

Lloyds/RBS– the PRA has mandated the capital requirements- the two banks’ compliance plans will be announced once discussion with all 8 major banks are concluded.

Co-operative Bank– needs to generate an extra £1.5bn Tier One capital

Nationwide– needs to increase its leverage ratio to 3% by the end of 2015

Barclays– the PRA has accepted Barclay’s plan to meet a 3% leverage ratio by June 2014.

The statement is a progress update on the 19 March 2013 FPC policy meeting. It represents the initial UK phase-in of the Basel III (CRD IV) regime, slated to culminate in a CET 1 capital ratio of up to 9.5% by 2019. Although the timeline may seem long, CRD IV requires such stringent and fundamental reform that implementation will inevitably be both costly and challenging.

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