TradingAims'  Instablog

With banks and the wider market generally holding on to gains or slipping into minor losses as the markets came to a close on Thursday, you would have to ask why the fed chose this moment to announce that they would be enforcing a proposal to bring in an international agreement on higher capital standards for banks also known as Basel III? Despite pleas from the US banks to soften some of the aspects of the new proposals, the fed appears to have taken a hard line and is insisting that banks toe the line and shore up their capital ratios and rely on equity rather than debt for lending.

This proposal will hit the larger cap, or "systemically important" banks which are supposed to hold an additional capital buffer of some 2.5% above what smaller banks will be required to hold. This will hit banks such as JPMorgan Chase (JPM), Goldman Sachs Group (GS) and Deutsche Bank (DB).

The announcement which came just before the close of trading on Thursday saw bank stocks give up slim gains or sink further into the red. Bank of America for example pushed a modest loss into a 2.9% loss at the close.