Banks fear capital swings if Basel III kills bond filter

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Banks have had more than two years to peruse the Basel III prudential rules since they were finalised in December 2010, but the impact of one footnote – which transfers the volatility of huge, previously exempt bond portfolios into bank capital numbers – is only now beginning to sink in. 

Paragraph 52 of Basel III lists what banks must include in common equity Tier I. This number, when divided by risk-weighted assets, produces the all-important common equity Tier I ratio, which is subject to a

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