Citigroup chief executive Vikram Pandit has called for banks to be more transparent about how they measure their risk in an FT oped, the newspaper reports. He writes that each bank should be required to explain how it would measure risk in a standard portfolio, allowing investors to “compare apples with apples”. “Shining a light on the reality behind reported capital ratios would encourage financial institutions to take a more conservative approach to risk. Investors would reward institutions whose approach to risk and capital holdings seem to be sound and to punish those who appear to get it wrong,” Mr Pandit writes. Mr Pandit’s proposal calls for banks to apply their models against a standard portfolio. Mark Carney, chairman of the Financial Stability Board, a global body of regulators, said Mr Pandit’s idea could have merit. “It couldn’t hurt. It would be better if you had four portfolios rather than one.”

This entry was posted by Kate Mackenzie on Wednesday, January 11th, 2012 at 4:38 and is featured in The 6am Cut London (11 Jan 2012) . Tagged with capital ratios, Risk adjusted capital, vikram pandit. Edit this entry.