How Balanced Are Brokers And Banks When It Comes To Regulatory Requirements?

In a new report, Bank of America analyst Erika Najarian discusses the continuing improvement big banks are making to their balance sheets in the aftermath of the Financial Crisis. In an effort to make sure that banks are never again caught with their pants down from a capitol standpoint, regulators have imposed a number of new post-crisis balance sheet requirements.

5 ratios
Overall in Q2, Najarian sees continuing improvement for most big banks when it comes to the five key regulatory ratios that they are all balancing:
1. CET1- Common Equity Tier 1 ratio of a bank’s core capital to its risk-weighted assets (RWAs)
2. TLAC- minimum Total loss-absorbing capacity requirement
3. SLR- Supplementary Leverage Ratio
4. NSFR- Net Stable Funding Ratio
5. LCR- Liquidity Coverage Ratio
Across the board, global banks and brokers reduced total RWAs by 3.0 percent in Q2, including major improvements by some big-name stocks.
 

Broker giant The Goldman Sachs Group Inc GS solidified its SLR as well in Q2, while Morgan Stanley MS improveD its CET1.

European investment banks
One of the most drastic Q/Q improvements came from Credit Suisse Group AG CS, which made major improvements to its LCR. Barclays PLC BCS, Deutsche Bank AG DB and UBS Group AG UBS all made modest improvements to SLR as well.