http://www.bloomberg.com/news/2014-04-02/euro-area-banks-face-tougher-risk-model-scrutiny-barnier.html
Euro-area banks face tougher scrutiny of how they measure the risk of losses on their assets, the European Union’s financial-services chief said.
Michel Barnier said that once the European Central Bank takes on oversight of euro-area lenders in November, its tasks will include tackling potential inconsistencies in the so-called risk-weight models banks use to measure the capital they need to withstand crises.
“The single supervisor will need to work on the great diversity of approaches in terms of bank risk-weight models that exist at the moment,” Barnier said in an interview yesterday in Athens, Greece. While banks across the EU can’t ever be expected to all have the same risk profile, “we can at least try to harmonize the thermometer” for measuring possible losses, he said.
Banks face mounting oversight over how they measure their risks, amid concern that their ability to adapt internal models could undermine moves to boost capital requirements after the crisis that toppled Lehman Brothers Holdings Inc. and left banks from the U.S. to Ireland close to collapse.
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