The Basel Committee on Banking Supervision will finalise the method for working out a leverage ratio this week, which measures total non-risk-weighted assets to capital.
According to Reuters, the committee will meet on 18 June 2013 and will put the template on totting up on and off balance sheets assets out to public consultation in the next week or two.
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Without squaring book-keeping differences, European banks, which use international accounting rules, would blow through the leverage cap far sooner than US rivals, the Reuters’ report added.
"There will be a public template to reconcile accounting numbers and therefore U.S. GAAP will be neutralised," a regulatory source familiar with Basel’s approach told Reuters.
"US banks will have to adjust for computing the ratio. Non US banks may also have to adjust on other items but I anticipate the biggest adjustment on off balance-sheet is therefore for US banks," the source added.
Basel’s common rules for determining exposures will include "retreatments and adjustments" to deal with the accounting differences, the publication quoted the source as saying.
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By GlobalDataWorld leaders have already agreed the ratio should be set at 3%, meaning capital can be leveraged at no more than 33 times.
However, some UK and US policymakers want the leverage ratio set at 4% or more to counter what they see as Basel’s overly complex capital rules which rely on banks totting up risk weights themselves to determine their capital buffers.
Quoting unidentified regulatory sources, Reuters reported that there is no global consensus on revisiting the 3% ratio but work will continue on making it harder for banks to ‘game’ risk weights.
