‘The revised Basel liquidity regime is more straightforward than its predecessor. Dutch banks have already improved their positions, based on their migration plans for Basel III and the current Dutch liquidity requirements. All this is now bearing fruit, in that most Dutch banks already satisfy the revised requirements. The trick now, of course, is to hang on to this position in the coming years: the LCR will be phased in from 2015 and fully implemented by 2019. A small number of banks aren’t currently meeting all the specified requirements. They will need to adjust their migration plans for Basel III in order to satisfy them as soon as possible.’
Apart from the liquidity requirements, Basel III also imposes capital requirements on banks. What progress are Dutch banks making towards Basel III?
‘Dutch banks have drawn up highly ambitious plans for the migration to Basel III. Unfortunately, in a few cases, the financial crisis is threatening to throw things slightly off course. After all, banks want to meet their goals for Basel III by retaining earnings and attracting new savings. However, the crisis may cause credit losses to mount and results to decline, squeezing profitability. This is making it increasingly difficult for banks to realise their plans for the migration to Basel III. But they don’t intend to pull back on their ambitions.’
What does DNB currently expect of banks?
‘DNB feels it is important for Dutch banks to have a sound financial position, and to be among the international front-runners en route to Basel III. We want to prevent them from falling behind due to the crisis and from being overtaken by banks in other countries. The regulator will therefore continue to closely monitor the implementation of their plans. If we think a bank is lagging behind, we’ll immediately call it to account and urge it to implement additional measures. We’ll also soon be organising a seminar on Basel III for the banking sector as a whole.’