In response to the global financial and economic crisis, the Basel Committee on Banking Supervision, which is based at the Bank for International Settlements (BIS), introduced a package of bank regulatory measures (known as “Basel III”) at the end of 2010, which included higher capital and liquidity requirements for banks. The primary intention was to use these regulatory measures to increase the stability of the banking sector and its resilience in the event of a crisis, thereby ultimately protecting taxpayers from further burdens in the course of bank reorganizations and liquidations. This set of rules, intended as a recommendation for national legislators and supervisory authorities, was adopted by the EU as binding law for the member states in the framework of various directives and regulations.
In the course of a further planned development of these “recommendations”, a proposal known as “Basel IV” has been submitted, which, among other things, provides for higher risk weights for banks for company participations in the non-financial sector. Specifically, in the view of the Basel Committee, company participations should in future be assigned the same risk weighting as bank participations. In the view of the Basel Committee’s regulators, this amended regulation represents a suitable means of achieving adequate overall risk backing for loans and financial derivatives.
In order to examine the effects of such a future regime on Austrian banks, which historically and by international standards have a high exposure to equity investments, the asset positions of the banking sectors were analysed. As a result, the future core capital required under this proposed regulatory scheme was determined and options for action were identified.
Our Method Portfolio
- Simulation analyses of changed regulatory conditions
- Calculation models of the economic effects
Mag. Markus Fichtinger, MA
Tel.: +43 676 3200 405