A regulatory proposal for a 3% leverage ratio to be implemented by January 2018 could make it harder for banks to hold and use even the simplest derivatives, analysts say. "We're very concerned about the impact of the leverage ratio on our derivatives books, and we've been planning how to tackle this for some time," said Tim Gately, Citigroup's head of European credit trading. "Like with Basel III capital ratios, the focus will be on banks hitting those targets very quickly, which will mean focus on balance sheets and on getting those gross books down."

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