EU CAD beta lowered – but only for some

UK and European op risk executives were shocked when a EU Commission official revealed that although the beta for the trading and sales business line would be lowered to 15% from 18% in the EU's Capital Adequacy Directive, this benefit would only be available to some institutions.

Michel Martino, an official in the Banking and Financial Conglomerates Unit in the Internal Market Directorate at the EU Commission, told a London conference at the beginning of July that the beta for the trading and sales business line would be “transitionally” lowered to 15% until 2012. This benefit would be available to investment firms, as defined under EU legislation. However, banks could only qualify for this lower beta if 50% or more of their income came from their trading and sales

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