Risk 25: Banks prepare for a low-RWA future

Weight loss: preparing for a low-RWA future

Risk25 gym Mark Long

The banking industry has long used return on equity as a measure of success but, in many cases, senior management and business heads only cared about the first part of that ratio – banks were popular with investors, equity was cheap and, frankly, regulations did not require the industry to hold much of it. The picture could not be more different today. With Basel III forcing banks to hold a higher ratio of equity against a sharply increased risk-weighted assets (RWAs) number, dealers say return

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