1 Dec 2016

Prudential Data Report: EU GSIBs Prudential Capital and Liquidity - Q3 2016

Highlights

  • European systemically important banks (or EU GSIBs1) continued to improve their solvency positions during the quarter.
  • In 3Q16, EU GSIBs achieved the largest quarterly increase in CET1 ratio since 2014, equating to an increase of c48bps from 11.99% in 2Q16 to 12.47% in 3Q16.
  • The increase in solvency ratios was largely explained by a substantial decrease in RWAs of 4.1% QoQ. Around 42% of this variation can be attributed to changes in the regulatory treatment of a large foreign operation of one bank (€108bn decrease of a total of €254bn RWA decrease of all EU GSIBs during the quarter).
  • Other factors such as asset disposal, FX variations and balance sheet de-risking also contributed to the RWA decrease during the quarter (see charts 1.4-1.6 in the report for further detail).
  • The decrease in RWAs illustrate the continued balance sheet restructuring of banks to comply with CRDIV. This, in a volatile macro-environment which has not been favourable for capital raising through markets and as ultra-low interest rates limit a faster accumulation of capital through internal generation.