Europe banks cheer easing in leverage rules, shares rally
By Huw Jones and Steve Slater
LONDON (Reuters) - Deutsche Bank (DBKGn.DE: Quote) and Barclays (BARC.L: Quote) led European bank stocks on Monday to their highest for nearly three years after regulators watered down new rules aimed at strengthening banks but which could have limited their ability to lend.
Sunday's decision by the world's top central bankers was aimed at trying to avoid restricting financing for the global economy, and was seen as a positive for banks, especially those with big investment banking arms.
The easing of the rule, after lobbying by banks, is the latest sign of how regulators have become more willing to accommodate lenders as the focus switches to helping economic recovery.
The STOXX Europe 600 Banking index was up 1.4 percent at 205.2 points by 1100 GMT, its highest level since April 2011 and extending this year's rally to 6 percent. The index is up 26 percent since the start of 2013.
"The significant regulatory forbearance ... should go some way towards alleviating concerns on the leverage ratio, notably at Barclays and Deutsche Bank," Kinner Lakhani, analyst at Citi, said in a note.
The leverage ratio rules, due to come in from 2018, act as a backstop to a lender's core risk-weighted capital requirements. A ratio of 3 percent means a bank must hold capital equivalent to 3 percent of its total assets.