EU banks cooking books to avoid global systemic surcharge, ECB study shows

29 July 2019 9:01pm
Banks in Europe are manipulating their balance sheets to ensure they don’t face the high capital surcharges imposed on the world’s most systemically risky lenders, research for the European Central Bank has revealed.

The largest lenders in the EU are suppressing holdings of repurchase agreements as the end-of-year measurement deadline approaches, meaning they gum up financial markets and give a misleading picture of risk.

Under post-crisis rules finalized in 2011, the world’s 29 largest banks must hold between 0.5 and 3.5 percentage points more safe capital than smaller lenders to protect taxpayers from the risk of bailing out lenders that are too big or interconnected to fail.