Oct 15, 2013
From the Advisory Institute
Fix, Refine and Rebalance
Transactors, executives and the banking sector overall face critical decisions about their capital strategies.
To comply with Basel III guidelines, financial institutions must increase their capital, the nature and composition of which must be altered to:
- Comply with the new mandates
- Conform to leverage ratio requirements
- Reduce their risk-weighted assets (RWA)
- Make their accumulation of new risk more efficient.
Compliance will require careful examination of the strategy of the institution—in some cases prompting a rethinking of core elements of the organization’s franchise.
This paper describes strategies to reduce risk-weighted assets (RWA) in a manner that provides relief to capital and leverage requirements.