Tuesday 6 December 2016

New bank rules present threats and opportunities

Ronan Reid

Published 12/04/2015 | 02:30

AIB SUCCESSION: Allied Irish CFO Mark Bourke with outgoing CEO David Duffy walk ahead of chair Richard Pym and COO Stephen White. Photo: Mark Condren
AIB SUCCESSION: Allied Irish CFO Mark Bourke with outgoing CEO David Duffy walk ahead of chair Richard Pym and COO Stephen White. Photo: Mark Condren

Not enough people are thinking about Basel III - the new set of rules that imposes stringent capital and liquidity tests on banks.

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Implementation is targeted for early 2019 after a lot of false starts. Previous versions of the rules (known imaginatively as Basel I and II) focused on the reserves banks must hold but the new, and hopefully improved, version focuses on the risk of 'a run on the bank'. It essentially requires different reserves to be held for different types of bank deposits.

Basel III also allows an additional and discretionary buffer to be applied by local central banks.

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