The Basel Committee said that results of its study show variations in how 100 banks compute risk. The Basel Committee was made up of banking supervisors from different top financial centers.
According to the Basel study, the different ways in which risk was calculated could result in some outlier banks' reported capital ratios to vary by as much as 2 percentage points.
Stefan Ingves, Chairman of the Basel Committee, said that "While some variation in risk weightings should be expected with internal model-based approaches, the considerable variation observed warrants further attention."
On Friday, regulators reiterated the way in which banks compute risk to determine capital levels varies considerably. As a result, authorities said that there needed to be changes. A uniform way of calculating risks may be required so that investors would trust banks and the numbers they report as their capital holdings. Furthermore, policymakers say that until such time, trust would be hard to come by for a sector that was tarnished by financial crisis.
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