With the regulatory spotlight now shining on the leverage ratio, research by The Banker shows that 13 global systematically important banks (G-SIBs) might find themselves short of capital in the event of an increased ratio. These institutions clear the Basel III provisional leverage ratio of 3%, but Basel Committee on Banking Supervision (BCBS) will likely raise this number in the calibration pending either this year or next; two influential members, UK and US, have already increased the minimum leverage for systematically important banks, setting a precedent.
As chart one shows, if BCBS follows the UK lead and increases the ratio to 4.05%, BNP Paribas, Société Générale, Deutsche Bank, Nordea, Barclays and Mizuho will have to grow their Tier 1 capital. If the committee decides to observe the US standard of 5%, the ranks of G-SIBs with insufficient capital will swell to 13 institutions; the remaining French and Japanese G-SIBs, along with UBS, ING and RBS will also find themselves in need of an increase.
