Analysts and equity managers divided on future post Basel III

Bank stocks rally post-Basel III was symptom of short-term relief, but may not be sustainable

Fund managers and financial analysts are split on the outlook for bank equities in the wake of the Basel III regulations. Banks will need to hold common equity and retain earnings worth 4.5% of their assets by the start of 2015, up from 2%. By 2019 they must have a 2.5% capital conservation buffer of common equity to fall back on in periods of financial stress, taking the total to 7%. Without this buffer they will be prohibited from paying dividends. Regulators are also set to test a tier 1 leverage ratio of 3%, which would limit banks to lending 33 times their capital. Positive...