Basel III: We Lost, The Banks Won

[Andy Nguyen]

Under the agreement, banks will have six years starting Jan. 1, 2013, to progressively increase their capital reserves. Under current rules banks have to hold back at least 4 percent of their balance sheet to cover their risks. Starting in 2013, this reserve – known as tier 1 capital – will have to rise to 4.5 percent, reaching 6 percent in 2019. [..] In addition, banks will be required to keep an emergency reserve known as a "conservation buffer" of 2.5 percent. In total, the amount of rock-solid reserves each bank is expected to have by the end of the decade will be 8.5 percent of its balance sheet

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