Institutional Risk Analytics has released its latest survey of the US banking industry focused on Economic Capital. The survey includes the top 100 banks in the US by assets for the period 1989-2009 and includes calculations for Economic Capital, Risk Adjusted Return on Capital or "RAROC," and Efficiency. Economic Capital is calculated for each FDIC-insured depository as well as for the "bank-only" aggregations of the bank subsidiaries of all US bank holding companies (BHCs).
Economic Capital is a measure of risk, not of capital held. As such, it is distinct from familiar accounting and regulatory capital measures. Whereas most traditional measures of bank capital adequacy relate existing capital levels to assets or some form of risk-adjusted assets, economic capital relates capital to risk.
Part of the professional version of The IRA Bank Monitor, our measure for Economic Capital is based on classical sources and incorporates measures for three categories:
* Lending Operations
* Trading Operations
* Investing Operations
The IRA Bank Monitor is the premier bank ratings and analytics platform in the banking industry. Compare the Bank Monitor to other commercial off-the-shelf bank analytics systems:
Coverage: IRA Bank Ratings cover all FDIC-insured banks and thrifts. Other bank ratings services cover less than one third of US depositories.
Objective: IRA Bank Ratings are entirely mechanical and do not include any human intervention in the calculation of the quarterly stress ratings and performance metrics.
Timeliness: IRA ratings are the most timely in the industry, with preliminary ratings available 40 days after the quarter close and final ratings published around at 55 days.
Technology: IRA is the only ratings firm in the industry to calculate preliminary bank ratings
in real time using the FDIC’s unique central data repository for public distribution of bank financial data.
"The results of the 2010 Economic Survey confirm that there are some profound changes ongoing in the banking industry," said IRA co-founder Christopher Whalen. "Dennis Santiago and our technical team have created a transparent and mechanistic model for tracking changes in bank business models. There are some indications that the industry is stabilizing after five years of declining risk adjusted returns, but it is too soon to call the turn in the crisis."
Copies of the IRA Economic Capital Survey will be available for sale online via the
IRA Bank Ratings portal (www.irabankratings.com) at the end of this week at the cost of $1,000. For more information about the professional version of The IRA Bank Monitor, please contact us at (310) 676-3300 or info@institutionalriskanalytics.com.
Questions? Comments? info@institutionalriskanalytics.com
