In a new report, Bank of America analyst Erika Najarian discussed the continuing improvement big banks are making to their balance sheets in the aftermath of the Financial Crisis. In an effort to make sure that banks are never again caught with their pants down from a capital standpoint, regulators have imposed a number of new post-crisis balance sheet requirements.
5 Ratios
Overall in Q2, Najarian sees continuing improvement for most big banks when it comes to the five key regulatory ratios that they are all balancing:
- 1. CET1- Common Equity Tier 1 ratio of a bank’s core capital to its risk-weighted assets (RWAs)
- 2. TLAC- minimum Total loss-absorbing capacity requirement
- 3. SLR- Supplementary Leverage Ratio
- 4. NSFR- Net Stable Funding Ratio
- 5. LCR- Liquidity Coverage Ratio
Across the board, global banks and brokers reduced total RWAs by 3.0 percent in Q2, including major improvements by some big-name stocks.
U.S. Banks & Brokers
The report included…
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