An increasing number of banks are becoming capital or liquidity constrained due to the current regional slowdown in Asia, says Christian Pedersen from Oliver Wyman.
«This may lead to renewed calls for tailoring of the Basel standards to Asian countries. However, the argument that Basel standards were set to fix struggling banks in North American and Europe and then cascaded over a very healthy banking sector in Asia, is weakened,» Christian Pedersen (pictured below), Head of the Finance and Risk Practice, Asia Pacific for Oliver Wyman, said.
These are complex rules that may need to be recalibrated for the region, but there is general support and recognition that these rules were designed to increase stability and ensure liquidity globally. The key is to make sure this happens whilst still promoting economic growth.
Comprehensive Analysis
«The coming two to three years will reveal which Asian banks have adopted the spirit of the Basel regulations, if not full compliance, and put in place both appropriate buffers and strategies to manouver the ongoing market volatility,» Pedersen adds.
A new Oliver Wyman report commissioned by the Global Financial Markets Association provides a comprehensive analysis of the potential costs of the new Basel standards on lending and capital markets, as well as both intended and unintended consequences for bank practices.
