European banks manoeuvre to meet capital requirements

11/9/2011 | Bloomberg

Banks in Europe are using a practice called risk-weighted asset optimisation to bolster their capital ratios without going to shareholders, selling assets or reducing lending. "By allowing sophisticated banks to do their own modelling, we are allowing the poacher to participate in being the gamekeeper," said Adrian Blundell-Wignall of the Organisation for Economic Cooperation and Development. "That risks making core capital ratios useless."

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