Basel iii

Breaking News

We will have the finalised Basel iii package before the 15th of September, 2010.

We believe that banks will have to hold Tier 1 capital of 9 percent (in Basel 2 we have 4%), including a 3 "conservation buffer".

At least 5 percent of Tier 1 will be pure equity or retained earnings.

If Tier 1 capital is less than 9%, banks will not be allowed to pay out dividends to shareholders.

In good times, banks have to allocate another 3%, the "anti-cyclical buffer". It simply means that in good times banks need Tier 1 capital of 12% in order to be able to pay dividends.

If we add 4% Tier 2 capital, we reach an interesting number: 16% (6 percent Tier 1, plus 4 percent Tier 2, plus 3 percent conservation buffer, plus 3percent anticyclical buffer).

Hedge funds are already shorting certain banks. Investors try to understand how much capital banks may need to raise in order to be able to pay dividends.

Next step: The G20 summit of leaders in November, where they will give their seal of approval