Every analyst has their own spin on what the impact of Basel III might be, and Bernard de Longevialle’s financial institutions team at credit ratings agency Standard & Poor’s has now added its own 16-page report. One of the most striking observations is the effect that tougher risk-weights on banks’ assets could have on certain banks that had recorded relatively healthy capital adequacy ratios under Basel II.

This chimes with The Banker’s own analysis of data from thebankerdatabase.com, running back more than 20 years, published earlier this month. We noted that some of the major European banking groups that run large investment bank operations had increased on balance sheet leverage much more sharply than their US counterparts during the boom years.

They had done this by making rather vigorous use of the risk-weighting process for assets held on their trading books. By assigning relatively low market risk to these assets, banks had been able to hold growing amounts of financial instruments without reducing their Basel II capital adequacy ratios.

We observed how risk-weighted assets at Credit Suisse, UBS and Deutsche Bank in particular had dipped below 25% of gross total assets. This compares with almost 60% for JPMorgan and Citigroup, and almost 70% for Bank of America Merrill Lynch.

Mr de Longevialle agrees with The Banker’s suggestion that Basel III may call time on this practice. He calculates that the risk-weighted value of assets on the trading books of Credit Suisse might rise more than three times when recalculated under Basel III rules, more than four times for Deutsche, and an eye-watering five times for UBS.

Ironically, the delays in implementing Basel III in the US may have played to American banks’ advantage in terms of Basel III compliance. The risk-weighting process under Basel I was more primitive, and allowed less arbitrage via the market-risk category. But European bankers are unlikely to be losing too much sleep over this – with a transition period potentially running to 2018, there is plenty of time to reshuffle their trading books before Basel III kicks in.

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