US banks face capital hit from resurgent advanced approaches

Banks pushed onto internal models wrestle with procyclical capital charges

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With the coronavirus crisis rattling markets and undermining the creditworthiness of even rock-solid firms, US banks have seen risks gauged using their own models leap higher relative to regulator-set standardised measures. Given that the latter are far clunkier than banks’ internal indicators and respond more slowly to changing credit conditions, this could have wide-ranging implications for capital allocation.

As of end-March, three systemically important US banks – Citi, Goldman Sachs and

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