Basel III, albeit delayed, is set to change the banking landscape. More capital and greater liquidity will change the way banks do business in the future. More interestingly, Basel III could well lead a change in the financial services landscape globally. A "Shadow Banking Sector" is already a reality and Basel III opens up significant opportunities for capital rich emerging market banks.
This is a first in a series of presentations exploring Basel III, its impact on the global banking sector and most importantly possible response strategies banks could adopt to gain competitive advantage.
Credit & counterparty credit riskIntroduces capital requirements to cover Credit Valuation Adjustments risHigher capital requirements for securitisation productsDerivatives and Repos cleared through CCPs are no longer risk-free and have 2% risk weightHigher correlation factor to risk weight large and unregulated financial institutionsLiquidityRegulatory liquidity risk reports produced at least monthlyWith ability to deliver weekly or daily reportsConsolidate clean exposures, liabilities, counterparties and market data in a centralisedLCR
Mexico's banks to adopt Basel III capital rules in September……the first worldwide to adopt the rules…..…."The reason for adopting (the rules) ahead of schedule is that really the system is very strong," Babatz said….Reuters August 21, 2012The central bank stated that the mandate would be "an interim measure to ensure banks hold sufficient liquid assets until Basel III LCR comes into effect" in January 2015, the media outlet reports.The banks in the UAE are currently well-positioned to cope with the standards as a result of them not having much exposure to sovereign debt, having substantial government support and being less connected to the global economy, according to the news source.Australian regulator moves to implement Basel III two years earlyAsia Risk, 7 Sep 2011…..Apra says it believes Australian authorised deposit-taking institutions (ADIs) are in a strong position to meet new minimum capital requirements and therefore has proposed accelerating the deadline……..Bangkok Central ng Pilipinas (BSP)BSP to Fully Implement Basel 3 Capital Adequacy Rules for U/KBs in 2014 01.06.2012…adopt the capital adequacy standards in full by January 2014 without recourse to a staggered implementation or a gradual phase-out of ineligible capital instruments. This recognizes the present strong capital position of the banking industry while providing for a reasonable transition period.This puts the Philippines alongside such jurisdictions as China, Australia, Hong Kong SAR and Singapore which have announced similar Basel III implementation plansJapan – Pillar 2 rules not in place.