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Most viewed in Business
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Capital ratios
Rules on higher capital ratios for banks were first set out in 1988 by the Basel Committee on Banking Supervision, now known as Basel I. They were revised in 2004 (Basel II). The rules were implemented in the EU by the Capital Requirements Directive (CRD), which came into force in 2007. During 2010, the EU agreed amendments designated CRD II, introduced at the end of that year, and CRD III, which came into effect at the end of 2011.
The crisis in financial markets from 2008 prompted regulators to toughen the rules once more. Basel III produced new rules for enhancing the quality and quantity of capital, strengthening capital requirements for counter-party credit risk and introducing a leverage ratio as a backstop to risk-based capital, as well as two new capital buffers.
In the EU, the Basel III requirements will be implemented via CRD IV in the form of a directive and regulation, proposed by the European Commission in July 2011. The changes are due to come into force from 1 January 2013.
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