BRIEF: Banks' new capital adequacy target: 12.5 percent
Dec 06, 2012 (Menafn - Globes - McClatchy-Tribune Information Services via COMTEX) --The capital adequacy target for the banks under the Basel 3 rules is 12.5 percent. This emerges from a draft Bank of Israel directive that has reached "Globes". Currently, the banks have to maintain a capital adequacy ratio of 12 percent. According to the draft, the banks will have to have a capital adequacy ratio of 12.5 percent from January 2015. In addition, Bank Leumi (tase:LUMI) and Bank Hapoalim (tase:POLI) will have to reach a capital adequacy ratio of 13.5 percent by January 2017.
At the end of December, all the banks had capital adequacy ratios higher than 12.5 percent. Bank Hapoalim has the highest, at 15.1 percent. Leumi's is 15.02 percent, Israel Discount Bank (tase:DSCT) and First International Bank of Israel (tase:FTIN) have 14.2 percent, and Mizrahi Tefahot Bank (tase:MZTF) has 13.11 percent.
The setting of a new capital adequacy target has removed a cloud of uncertainty. Now that the banks find themselves substantially above the target, this may affect the way they manage their capital, in some cases, and lead to a reduction in offerings of capital notes by the banks on the capital market.
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