Big banks closer to meeting new capital rules

Large banks are moving closer to meeting their capital requirements under Basel III, the banking reforms imposed to avoid a repeat of the 2008 global financial crisis, a study found Thursday.

The Basel Committee, which monitors lenders' progress towards meeting the new rules, said that as of June 30 last year the 102 big international banks in its study were 57.5 billion euros short of their targeted capital cushion.

The banks had cut their shortfall by nearly half from just six months earlier, the committee said in a statement.

Basel III requires lenders to have a capital cushion of at least 7.0 percent of the total risks they are carrying. Banks considered too-big-to fail are required to keep an additional cash cushion of at least 2.5 percent.

Global regulators reached a deal on the new rules in September 2010, and they are being phased in until January 2019.

To put the amounts into perspective, the Basel Committee pointed out that the banks' joint profit after tax but before distributions to shareholders was 456 billion euros for the year ending on June 30, 2013.

The study also measured the banks' compliance under new Liquidity Coverage Ratio (LCR) requirements, which will be gradually implemented starting next year.

The LCR rules came into the spotlight last year when regulators agreed to give lenders a reprieve by broadening the definition of the minimum assets every bank needs to hold, making it less costly for them to maintain the required buffer.

The Basel Committee found the big banks had a weighted-average LCR of 114 percent at the end of June last year, down from 199 percent in its previous study.

Despite the fall, the number remains far above the minimum requirement of 60 percent that will take effect next January.

That requirement is set to gradually rise to 100 percent by 2019.