This emerges from a quantitative impact study (QIS) of Basel III. Paul Hilbers, Division Director of Supervision Policy at De Nederlandsche Bank (DNB) provides insight into the challenge banks are facing. Here are his thoughts on the various aspects.
Major banks in theNetherlandsare said to be strongly capitalised, but the impact analysis still points to a greater impact on capital ratios than indicated by some analyst reports. How can this difference be explained?
I would like to emphasise that the analysis gives a snapshot of the situation at a point in time as it is based on balance sheet data of December 2009. Many analyst reports are based on more recent figures. If, at this moment, we would repeat the impact study, we would see that banks have meanwhile built up capital and liquidity buffers. This also means that shortages can be overcome: under the transitional arrangements for the implementation of Basel III, capital targets will be raised little by little until 2019. In a broader sense, banks could also take steps forward by making adjustments to their business models, such as the reduction of risk-bearing activities in their trading books.