Bank Capital Post 2008 Financial Crisis

Bank Capital Post 2008 Financial Crisis

In this video, January examines the new regime for bank solvency subsequent to the financial crisis of 2008, taking a closer look at the ever evolving regulatory landscape for bank capital and hybrid instruments.
Overview

The 2008 global financial crisis led to material changes in the way bank capital is defined and calculated, and to more stringent capital adequacy regulations to ensure banks have sufficient capital to remain solvent without any need for taxpayer bail-outs. The specific trigger for the bankruptcy of Lehman Brothers in 2008 was an acute lack of liquidity i.e. an ability to refinance liabilities coming due and fund day-to-day activities. The acute liquidity crisis was directly precipitated by fears about the bank’s solvency.

Key learning objectives:

  • What is bank solvency and why are low solvency levels a problem?

  • What improvements have been made to capital standards in recent years?

  • Define a bank’s basic capital structure today

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Summary
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Expert
January Carmalt

January Carmalt

January began her career in 1999 with Bank of America in Charlotte, NC. From the Credit Products team, she moved into fixed income bond research covering Telecoms and Financials. While in London, January focused on financial institutions bond research until her Director and head bond analyst role at Deutsche Bank. As of 2011, January has worked as a freelance writer.

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