FOREX

Global banking regulators are committed to strengthening capital requirements over time.

• The Basel Committee on Banking Supervision put out a press release yesterday providing colour on initiatives banking supervisors might undertake long term in response to the events of the last two years.

• We had highlighted most of these issues in a July 2008 report ("Bank capital ratios high but face pressure"), and do not believe that they have implications for share prices near term.

• The new capital requirements, if implemented, would lead to lower and more stable ROEs for the global banking system versus the pre-crisis model, in our view.

• The impact on Canadian banks is less clear as they already operate under stricter capital constraints than many of their global peers.