Banks have taken important strides in meeting the Basel III requirements that last year seemed out of reach.
The Basel Committee on Banking Supervision ruled that banks need to hold liquid (easy-to-sell) assets in order to protect them from short-term market crises. In December of 2012, research indicated a $780 billion shortfall from the Basel III standard, whilst today the shortfall stands at $268 billion, according to the Financial Times.
A minimum capital ratio of 7% will be required by 2018 in order to make banks more resilient and able to absorb unexpected losses without bailouts. 28 global banks which have been designated ‘systemically important financial institutions’ will have to maintain ratios of up to 9.5%.
Key elements leading to this rapid turn around appear to be the sales of less profitable and risky assets, although some analysts suggest that ‘tinkering’ with risk models may also be taking place.