CARs hit new low in western Europe

摘要

With the eurozone crisis showing no immediate signs of abating, and market confidence still severely dented, the overall soundness of the global banking system is likely to remain a focus of market participants and lawmakers alike for some time. The Banker's Top 1000 World Banks offers an insight into the global banking system's capital-to-asset ratios (CAR), a crucial indicator of soundness and an inverted measure of leverage. Due to regulatory demands, banks have had to boost their capitalisation levels significantly in recent years. However, western Europe still has the lowest aggregate CAR, with 4.25%, a slight reduction from 4.28% in last year's ranking, which equates to an average leverage of the western European banking system of 23.5. This is still very high and European regulators are doing their best to force banks to hold more loss-absorbing capital against their asset bases.