Standard & Poor’s is launching a new capital ratio for banks to adjust for risk and provide a clearer assessment of balance sheet adequacy, the credit ratings agency said on Tuesday.

S&P said it expects "marginal rating implications" when its new ratio approach is adopted.

The risk-adjusted capital (RAC) ratio will be used as the basis for analysing capital adequacy and should help maintain ratings comparability and consistency, S&P said.

Regulators around the world are attempting to reform or improve assessment of capital and S&P said its RAC ratio will be "globally consistent, more risk-sensitive than the leverage ratio, and largely independent from banks’ own risk assessment".

The recent flurry of regulatory initiatives to reform capital measures "is a clear sign that current regulatory ratios are not satisfactory", it said.

The new ratios aim to capture a range of risks, including credit risk, trading risk, equity risk, operational risk and concentration risk.

S&P said its risk weightings will be more risk-sensitive than the Basel II standardized approach. They may be lower for assets with a low credit risk, such as prime mortgages, and higher for riskier assets such as real estate construction loans. The agency said case studies using data from 150 banks in the past year suggested that the global banking system would be on average relatively weakly capitalised to weather a crisis scenario in its risk-adjusted capital framework.

The RAC ratio average for the 150 banks was slightly more than 7 percent and about 5.5 percent for the largest 20 banks, it said.

After adjusting for concentration and diversification, the RAC ratio was on average 30 percent lower than the reported Basel II Tier 1 ratio. In the United States the RAC ratio would be significantly lower on average than the regulatory ratio, it said.

S&P said it expects to start referring to the new ratio in the next few weeks in its reports, which will continue to use a broad analysis of a bank’s credit quality.