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Surcharges Become Reality

The proposed surcharges I mentioned last week are on the books. The surcharges, between 1 percent and 2.5 percent of risk-adjusted assets, are meant to protect banks from themselves in the case of another financial crisis.

"The surcharge comes on top of the worldwide Basel III minimum of 7 percent set last year for all banks," according to last weekend's Financial Times. "That means roughly eight of the biggest, most interconnected banks have to maintain top quality ‘core tier one capital' equal to 9.5 percent of their risk-weighted assets by 2019. About 20 more banks will face total ratios of 8 to 9 percent."

So it looks like capital requirements are up and surcharges are in. Here's hoping banks realize that customer value is not out.


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