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Consequences of Basel III for Notional Pooling

Dominic Hoogendijk, Enigma Consulting | 9 July

Over the next few years banks will have to prepare themselves for compliance with the new rules that the Basel III capital adequacy regime has set for financial institutions (FIs). The 2008 financial crisis and the introduction of Basel III have caused limitations in the available liquidity of companies. As a result, companies are looking for cash.

The Bottom Line from Basel III

Nick Burge, Lloyds Bank | 8 July

The package of new rules being introduced under the Third Basel Accord have been held up as the world’s best chance to avoid another financial meltdown. These regulations aim to support long-term financial stability and growth in the economy, as well as armouring banks against financial stress, and are the key regulatory response to the banking crisis of 2008. At their core, they aim to make banks less risky by determining minimum requirements for managing against both solvency and liquidity events.

Basel III: Why the Liquidity Coverage Ratio is a Game Changer

Dimitrios Raptis, Citi | 8 July

In the aftermath of the liquidity crisis that financial markets experienced in 2008-09, the Basel Committee of Banking Supervision (BCBS) deployed an action plan to promote a more resilient banking sector. One of the most recent radical reforms was the recent recalibration of the liquidity coverage ratio (LCR). This key metric governs a financial institution’s ability to sustain a 30-day liquidity stressed scenario which will involve, among others, a three-notch downgrade in its public credit rating, partial loss of unsecured wholesale funding, larger collateral cutbacks and partial loss of secure short-term financing transactions for certain liquid assets.

Basel III: Latest Developments on the Liquidity Side

Robert Lyddon, IBOS Association | 7 July

The issue is the introduction of the Net Stable Funding Ratio (NSFR), which aims to avert a repeat of scenarios such as those that brought about the downfall of Continental Illinois National Bank in 1984 and the UK’s Northern Rock in 2007, where banks were running a large mismatch of the final maturity of assets and liabilities.