Leverage ratio a victim of politics
Some of the politics behind the working out of international rule-setting for banks got an airing at the ASIC Summer School in Melbourne yesterday.Hans Hoogervorst, chairman of the Netherlands Authority for the Financial Markets, referred to the political pressure on the Basel committee, directed by bank management through their local politicians at the committee.The context for Hoogervorst's remarks was his perception that international agreement was already weakening on the case for a shift to a simple leverage ratio as a key regulatory tool of patrolling levels of bank capital.While banks are behaving as if this ratio will be reintroduced, Hoogervorst cited recent remarks by the general manager of the Bank for International Settlements, Jaime Caruana, that this might be introduced only gradually.