The Federal Reserve Board voted earlier in the week on the nation's proposed interpretation of the Basel III requirements, and new provisions set forth specifically for major lending institutions have left these organizations feeling tired due to a new focus on matters other than risk weighting.
This comes after many industry representatives, and even government officials, have provided widespread opposition to the capital requirements, supplying criticisms ranging from their potential negative impact on lending to saying that as stated, the rules are not focusing on the right metrics.
The Financial Times reports that while these larger organizations have put substantial effort into accumulating capital, with the majority of them specifying in their first quarter financial results that they already have the high-quality assets needed to meet the Core Tier 1 ratio that has been thought of as a crucial component to Basel III, they are now concerned about meeting other requirements.
Although these major banks have asserted that they have the correct levels of RWA, many market experts have observed that the organizations are focused on "optimizing" their risk weighting figures instead of actually generating new capital, according to the news source.
◦ Asset Liability Management
◦ Portfolio Risk
◦ Sensitivities & Hedging
◦ Stress Testing & Scenario Analysis