Banks in the Asia-Pacific region are in better shape than those in advanced economies, including the United States and Europe, according to credit watcher Standard & Poor’s Ratings Services.
S&P issued the report as banks worldwide prepare for Basel III’s new capital requirements in 2013, and Asia-Pacific banks look set to undergo a shift in industry dynamics as they adjust their business models in the long run.
Basel III serves as the third edition of the minimum standards applied by regulators to internationally active banks. It is a set of reform measures aimed at increasing the quality of regulatory capital and ensuring global consistency to foster greater resilience among banks to deal with financial and economic stress, improve risk management, and strengthen banks’ transparency.
The Basel Committee on Bank Supervision released its final recommendations for the global regulatory framework in December 2010 and updated them in June 2011. The new capital requirements will be implemented in 2013, and the full implementation of the framework is scheduled in 2019.
“Overall, we believe that most rated Asia-Pacific banks are unlikely to face significant difficulty in complying with Basel III, although some banks with weak capital quality or a high dependence on wholesale funding will find it tougher to adapt to the new global regulatory framework on bank capital adequacy and liquidity,” it said.
Bangko Sentral Governor Amando Tetangco Jr. said the regulator was now looking into the implementation of Basel III in the Philippines. “We have to look whether these new elements would be needed in the local banking environment like liquidity buffer,” he said.
Tetangco also said the Bangko Sentral had convened a high-level Financial Stability Committee to take deliberate stock of potential systemwide risks.
“Technical work is under way on the measures and metrics needed to monitor and mitigate systemwide risks. In this way, we can stay ahead of transaction-level risks before they become systemic and disruptive,” he said.
Tetangco said a recent stress test showed that Philippine banks were strong enough to withstand another bout of global economic uncertainty, given their high levels of capital that are above the international standards.
“The Philippine banking system will be able to keep abreast in an increasingly uncertain market. I am certain of that,” Tetangco said.
“Our recent stress test results show that for the 55 universal, commercial and thrift banks tested, their aggregate balance sheet shows a remarkable ability to absorb extreme values of risk,” he said.
http://www.manilastandardtoday.com/insideBusiness.htm?f=2011/october/22/business3.isx&d=2011/october/22
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