Connect with us

Trading

How does Basel III regulate the banking sector

Published

on

gbaf1news

Talking about the financial management and control on the economies depicted by the various banks, one might wonder how these banks are regulated and what drives their performance. There are various regulatory measures which give directions to the banks’ and improve their performance. One such regulatory measure is ‘Base III’. Basel III can be defined as a comprehensive set of reform measures, developed by Basel Committee on Banking supervision. It is aimed at strengthening the regulation, supervision and risk management of the banking sector.
The various measures the Basel III concentrates on are:

  • The banking sector experience several shocks arising from financial and economic stress and Basel III offers solutions to absorb such shocks.
  • Managing and improving on the risk management and governance abilities,
  • Basel III also looks into strengthening bank’s transparency and disclosures.

The Basel III measures are new global standards for capital adequacy and liquidity for banking institutions. Any new measure is formulated on the basis of the declining performance of the existing measures, Basel II, in this scenario. The major differences in the implementation of Basel III accords from Basel II strengthen Tier I capital requirements from 4% (of the Risk Weighted Assets or RWA) to 6%. Basel III also proposes the banks to hold a minimum of 4.5% of common equity in the market, thus increasing the performance by 2.5% compared to Basel II.
With the introduction of Basel III accords, Tier II capital requirements will change and the Tier III capital structure will be completely eliminated.
The agenda is for the banks to evaluate their balance sheets which will further help them examine a situation if they need to keep away from riskier assets or recuperate on their overall rate of return to stay within the new guidelines.
Basel III is contrived to achieve better quality capital, which in turn, is associated with higher loss-absorbing capacity. Less loss, stronger will be the bank and thus better economic structure.
Counter cyclical Buffer: Being one of the key elements in Basel III, counter cyclical buffer can be better explained as an objective to augment capital requirements in good times and decrease the same in bad times. In other words, this activity will slow the banking endeavour when it is in good shape to maintain liquidity, and also encourage lending when it sails through tough times. The buffer range will be 0% to 2.5%.
Leverage ratio: It is explained as the relative amount of capital to total assets (including risk-weighted assets). Thus Basel III norms apply this leverage ratio as a safety measure against tough times.

Trading

Energy stocks drag down FTSE 100, IG Group slides

Published

on

Energy stocks drag down FTSE 100, IG Group slides 1

By Shivani Kumaresan

(Reuters) – London’s FTSE 100 slipped on Thursday, weighed down by falls in energy stocks as oil prices slid after a surprise increase in U.S. crude inventories, while IG Group tumbled on plans to buy U.S. trading platform tastytrade for $1 billion.

The blue-chip FTSE 100 index lost 0.4%, while the domestically focussed mid-cap FTSE 250 index also slid 0.4%.

Energy majors BP and Royal Dutch Shell fell 3.2% and 2.5%, respectively, and were the biggest drags on the FTSE-100 index. [O/R]

“What is holding back the UK is a lack of tech stocks to capture the ‘rotation’ back into tech seen since Netflix results,” said Chris Beauchamp, chief market analyst at IG.

“Stock markets overall are much quieter today, looking so far in vain for a new catalyst for further upside.”

The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy and led to mass layoffs.

British Prime Minister Boris Johnson said it was too early to say when the national coronavirus lockdown in England would end, as daily deaths from COVID-19 reach new highs and hospitals become increasingly stretched.

IG Group tumbled 8.5% after announcing plans to buy tastytrade, venturing into North America after a stellar year for the new breed of retail investment brokerages.

Ibstock jumped 7.3% to the top of the FTSE 250 after the company said fourth-quarter activity benefited from better-than-expected demand for new houses and repairs.

Pets at Home Group Plc rose 2.2% after reporting an 18% jump in third-quarter revenue, boosted by higher demand for its accessories and veterinary services as more people adopted pets during lockdowns.

(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V and Mark Potter)

Continue Reading

Trading

Wall Street bounce, upbeat earnings lift European stocks

Published

on

Wall Street bounce, upbeat earnings lift European stocks 2

By Amal S and Sruthi Shankar

(Reuters) – European stocks rose on Wednesday after Dutch chip equipment maker ASML and Swiss luxury group Richemont gave encouraging earnings updates, while investors hoped for a large U.S. stimulus plan as Joe Biden was sworn in as president.

The pan-European STOXX 600 index closed 0.7% higher, getting an extra boost as Wall Street marked record highs.

All eyes were on Biden’s inauguration as the 46th U.S. President, with traders betting on a bigger pandemic relief plan and higher infrastructure spending under the new administration to boost the pandemic-stricken economy.

Tech stocks rallied to a two-decade peak in Europe after ASML Holding NV rose 3.0% to all-time highs on better-than-expected quarterly sales and a strong order intake for 2021.

Meanwhile, Richemont rose 2.8%, after posting a 5% increase in quarterly sales as Chinese splashed out on Cartier, its flagship jewellery brand.

Britain’s Burberry jumped 3.9% after it stuck to its full-year goals, saying higher full-price sales would boost annual margins, while Asian demand remained strong.

The pair boosted European luxury goods makers that are heavily reliant on China, with LVMH and Kering gaining between 1% and 3%.

“Any sign that retail spending is picking up in China is going to be a boost to the Western markets and those heavily exposed to it,” said Connor Campbell, financial analyst at SpreadEx.

The European Central Bank is set to meet on Thursday. While no policy changes are expected, the bank could face more questions about an increasingly challenging outlook only a month after it unleashed fresh stimulus to bolster the euro zone economy.

“With the new round of easing measures fully in place and no new forecasts to be presented tomorrow, it should be a fairly uneventful day for the euro,” ING analysts said in a note.

Italy’s FTSE MIB gained 0.9% and lenders rose 1.6% after Prime Minister Giuseppe Conte won a confidence vote in the upper house Senate and averted a government collapse.

Conte narrowly secured the vote on Tuesday, allowing him to remain in office after a junior partner quit his coalition last week in the midst of the COVID-19 pandemic.

Daimler AG jumped 4.2% after its Mercedes-Benz brand unveiled a new electric compact SUV, the EQA, as part of plans to take on rival Tesla Inc.

Germany’s Hugo Boss added 4.4% after Mike Ashley-led Frasers said it boosted its stake in the company.

(Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur and Kirsten Donovan)

Continue Reading

Trading

Miners lead FTSE 100 higher on earnings cheer

Published

on

Miners lead FTSE 100 higher on earnings cheer 3

By Shivani Kumaresan

(Reuters) – UK’s FTSE 100 rose on Wednesday as miners gained after a strong production forecast from BHP Group, while encouraging updates from luxury brand Burberry and education group Pearson drove optimism about the earnings season.

BHP Group Ltd climbed 2.8% after it forecast record iron ore production for fiscal 2021, helped by high prices for the commodity. Other miners Rio Tinto, Anglo American and Glencore rose more than 2%.

Global markets rallied in anticipation of more fiscal spending as Joe Biden prepared to take charge as the 46th U.S. president.

“There is a view in the markets that more spending is in the pipeline, after all, Mr Biden will want to start his presidency on a positive note,” said David Madden, market analyst at CMC Markets UK.

The FTSE 100 index rose 0.4% and the domestically focussed FTSE 250 index added 1.4%.

The FTSE 100 has recorded consistent monthly gains since November after the sealing of a Brexit trade deal and hopes of a vaccine-led economic recovery, but has recently lost steam as tighter business restrictions sparked fears of a slow rebound.

Burberry rose 3.9% as it stuck to its full-year goals and said higher full-price sales would boost annual margins and Asian demand remained strong.

Global education group Pearson jumped 8.6% after its global online sales grew 18% in 2020, helped by strong enrolments in virtual schools.

WH Smith Plc surged 10.4% to the top of the FTSE 250 index as its trading during Christmas was ahead of its expectations.

(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V, William Maclean)

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Latest Articles

Dollar pauses its decline on fresh virus worries 4 Dollar pauses its decline on fresh virus worries 5
Finance17 mins ago

Dollar pauses its decline on fresh virus worries

By Hideyuki Sano TOKYO (Reuters) – The U.S. dollar stabilised on Monday after a recent decline as fresh worries about...

European lenders exit Amazon oil trade after scrutiny by campaigners 6 European lenders exit Amazon oil trade after scrutiny by campaigners 7
Business19 mins ago

European lenders exit Amazon oil trade after scrutiny by campaigners

By Brenna Hughes Neghaiwi, Matthew Green and Simon Jessop ZURICH/LONDON (Reuters) – Credit Suisse, Dutch lender ING and France’s BNP...

Asian shares rise as U.S. stimulus plans offset virus woes 8 Asian shares rise as U.S. stimulus plans offset virus woes 9
Business21 mins ago

Asian shares rise as U.S. stimulus plans offset virus woes

By Swati Pandey SYDNEY (Reuters) – Asian shares rose on Monday as concerns over rising COVID-19 cases and delays in...

Oil prices edge lower as COVID-19 lockdown concerns overshadow demand prospects 10 Oil prices edge lower as COVID-19 lockdown concerns overshadow demand prospects 11
Business23 mins ago

Oil prices edge lower as COVID-19 lockdown concerns overshadow demand prospects

By Florence Tan SINGAPORE (Reuters) – Oil prices slipped for a second straight session on Monday as renewed COVID-19 lockdowns...

BP's oil exploration team swept aside in climate revolution 12 BP's oil exploration team swept aside in climate revolution 13
Business27 mins ago

BP’s oil exploration team swept aside in climate revolution

By Ron Bousso LONDON (Reuters) – Nothing escapes the winds of change now sweeping through BP, not even the exploration...

Big Oil hits brakes on search for new fossil fuels 14 Big Oil hits brakes on search for new fossil fuels 15
Business31 mins ago

Big Oil hits brakes on search for new fossil fuels

By Ron Bousso LONDON (Reuters) – Top oil and gas companies sharply slowed their search for new fossil fuel resources...

Natural catastrophes cause above-average $100 billion in insurance losses in 2020 - Aon 16 Natural catastrophes cause above-average $100 billion in insurance losses in 2020 - Aon 17
Business34 mins ago

Natural catastrophes cause above-average $100 billion in insurance losses in 2020 – Aon

LONDON (Reuters) – Natural catastrophes resulted in $97 billion in insured losses in 2020, 40% above the average for this...

Bank of England told to stop buying 'high carbon' bonds 18 Bank of England told to stop buying 'high carbon' bonds 19
Banking37 mins ago

Bank of England told to stop buying ‘high carbon’ bonds

By David Milliken LONDON (Reuters) – A group of British members of parliament said on Monday that the Bank of...

Global green bond issuance hit new record high last year 20 Global green bond issuance hit new record high last year 21
Business39 mins ago

Global green bond issuance hit new record high last year

By Nina Chestney LONDON (Reuters) – Global green bond issuance reaGlobal green bond issuance hit new record high last yearched...

Online fashion retailer Boohoo to buy Debenhams brand - FT 22 Online fashion retailer Boohoo to buy Debenhams brand - FT 23
Business42 mins ago

Online fashion retailer Boohoo to buy Debenhams brand – FT

BENGALURU (Reuters) – Online fashion retailer Boohoo Group Plc is set to acquire collapsed British department store group Debenhams in...

Newsletters with Secrets & Analysis. Subscribe Now