Systemic banks shrink balance sheets at reporting dates – BIS paper
Authors find “systematic” balance sheet compression often results in lower capital requirements
Global systemically important banks (G-Sibs) tend to shrink their balance sheets around reporting deadlines, often leading to lower capital surcharges, research published by the Bank for International Settlements finds.
Luis Garcia, Ulf Lewrick and Taja Sečnik estimate banks’ G-Sib scores on a quarterly basis using data on 166 large European banks from 2014–2020. They find banks used several methods to compress their balance sheets and “manage down” their scores at the date each year that was
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