Credit Suisse may slip leverage capital bind
A build up of risky assets at Credit Suisse may soon cause its leverage-based capital requirement to lose its status as the bank’s binding constraint.
Risk density – calculated as risk-weighted assets (RWAs) divided by total leverage exposure – is on track to hit 33% at the bank by the end of Q1, up from 32% as of end-2019 and 28% in 2016.
The Swiss too-big-to-fail regime (TBTF 2), which came into full effect at end-2019, compels banks to maintain a ratio of Common Equity Tier 1 (CET1) capital
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