Monday 25 September 2017

Leverage easing gives boost to European banks

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Maud van Gaal

European bank shares advanced, led by Deutsche Bank and Barclays, after global regulators softened their stance on how companies calculate leverage.

Deutsche Bank rose as much as 4.2pc in Frankfurt trading, its biggest increase in six months. Barclays added 2.4pc in London. Swiss bank UBS gained 2.4pc.

"In a number of key areas the requirements have improved" for banks, including derivatives and off-balance sheet items, Credit Suisse analysts said. "We think Deutsche Bank has the most to gain from a lower exposure measure."

Global regulators are taking measures on leverage and requiring banks to set aside more capital as they seek to prevent a repeat of the financial crisis that struck in 2008.

The 44-member Bloomberg Europe 500 Banks and Financial Services Index advanced as much as 1.5pc to the highest level in almost three years.

Meeting on Sunday in Switzerland amid warnings that an original plan would penalise low-risk financial activities and hurt lending, the Basel Committee on Banking Supervision gave banks more scope to use an accounting practice known as netting to calculate a leverage ratio.

Proposals on how to determine off-balance sheet activities were also eased as regulators finalised the plan.

(Bloomberg)

Irish Independent

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