LONDON, March 4 Changes to how banks add up
risks on their books to determine capital levels are inevitable
and lenders must acknowledge there is a problem to be fixed, a
global banking supervisor said on Tuesday.
Stefan Ingves, chairman of the Basel Committee of banking
supervisors from nearly 30 countries, said variations in how
banks add up risks were "uncomfortably wide" but not all lenders
accept there is a problem in the first place.
"The message I would like to leave you with today is that
there is one (a problem), and we plan to do something about it,"
Ingves said in speech to a financial conference in New York.
"Question marks remain about the reliability and
comparability of risk-weighted asset calculations and, until
these are resolved, confidence in capital ratios cannot be fully
restored," said Ingves, who is also governor of Sweden's central
After pressure from British and U.S. regulators who say the
current rules are too complex and easily circumvented, it is the
clearest response yet from Ingves that major changes are in the
pipeline to restore public trust in lenders.
Many regulators are concerned about how the variations in
adding up risks leads to big capital differences between major
banks holding similar assets, making it harder for them to know
if they are holding enough capital.
Ingves said the committee will develop a set of
"simplifications and safeguards" to limit variability, perhaps
by putting curbs on the in-house models big banks use to add up