Concern over accuracy of RWAs grows
Risk-weighted assets (RWAs) play a crucial role in minimum bank capital requirements under the Basel framework. However, regulators are increasingly anxious about differences in the calculation of RWAs between firms. Just how much of a problem is it? Mark Pengelly investigates
Fixing global bank capital standards has been a bit like mending a leaky roof. Regulators can spend months plugging holes in one area, only for another leak to be spotted elsewhere. While the Basel Committee on Banking Supervision has worked flat out for more than two years to fix the perceived shortcomings of Basel II, a gaping hole has become more and more obvious – namely, huge variations in the risk-weighted assets (RWAs) calculated by banks. Analysts and regulators are poking around the
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