State banks are ready to agree with the «Basel 3»
State banks are ready to agree with the «Basel 3»
Date: July 23, 2016
the source: Dubai – Wael Lababidi
Gamal physical, Director General of Emirates Institute for Banking and Financial Studies, the most active in the state banks are ready to agree with the Basel 3 items, pointing out that the enjoyment of the banks in the state high financial solvency exceeds the new requirements of the Basel 3 gives a comparative advantage to compete at the regional and global levels.
He pointed physical in exclusive statements to «economic statement» that the greatest challenge facing the banks lies not in compliance with the Basel 3, but in the ability of these banks to support the orientations of the country’s economy, especially in its plans to shift away from oil as well as investment prospects that will be offered Expo Dubai 2020.
He explained that, according to the circulation of the Central Bank No. 33/2015 it is incumbent upon the state banks commitment to apply the first criterion of liquidity (liquidity coverage rate) this year, pointing out that this standard is intended to ensure that banks have sufficient liquidity in the short term – 30 days – to cover any extraordinary pressure to withdraw liquidity from the banking and standard requires capacity equal to or greater than 100%.
The Central Bank of the UAE said last December that he would begin to communicate with the banks in the country in the direction of the application of capital requirements in accordance with the terms of the Basel 3 to ensure the compliance of banks to these requirements fully by 2018, which aims to enhance the liquidity requirements and practices of governance and risk management in banks.
Under the capital of the Basel 3 requirements, the timeframe for the full implementation of the system of new capital is the end of the year 2018, the system contains new definitions of capital, and new requirements for capital reserves, and the quality of capital better in terms of absorption losses.
He explained the beauty of physical: «adopt Basel 3 on two main axes: first relates to capital in this according to the latest published data from the Central Bank, the solvency capital amounted to 18.1% in state banks and the Central Bank had previously identified 12% and Basel 3 requires 8% as a fundamental and add 4% relative financed from Tier I capital.
And over this is that operating in the country banks enjoyed by the solvency capital of Tier I 16.2% reached and therefore the state banks do not have any financial constraints with regard to this axis.
The second axis is related to rates of liquidity and this has been introduced in the wake of the recent global financial crisis, which is the measurement of the ability of banks under pressure in the short term – 30 days – long-term – a full year – and with respect to the first part has identified him this year and the second part until 2018.
General Manager of the Emirates Institute for Banking and Financial Studies and added that with respect to that, the UAE Central Bank has identified the liquid assets to be taken into account when calculating these ratios and the method of calculation was notified of the banks so. In addition to this, it has been the formation of a technical committee to provide technical support for the banks and the follow-up adherence to these standards. »
He pointed physical: «can be considered to Basel from my point of view, the first challenge relates to the extent of the ability of banks in the country to adopt international standards and commitment in this I see that the state banks and behind the policies and supervision of the Central Bank has demonstrated the ability to cross the difficult crises because of their solvency high-quality financial assets and good governance and the other side is the opportunities, Vbazl 3.
The challenge came, it came with opportunities, as banks in the country enjoy a high financial solvency exceeds the new requirements of the Basel, allowing them a comparative advantage to compete at the regional and global levels.
On the domestic side, there still has a lot to support the country’s economy especially in terms of strategic directions towards economic shift away from oil as well as investment prospects will be offered by the Expo 2020. Perhaps the challenge is here and not in the commitment to Basel.
And on ways to support the financing capacity of banks amid talk of a liquidity squeeze in light of falling oil prices, the beauty of physical, said: «there is still a need to support the bond market in the local currency and provide mechanisms to stimulate banks to bonds and instruments issued as one of the major tools to support the financing capacity of the banks and stimulate trading tools market local currency debt remains high at banks and investment development capabilities and competitive opportunities must be supported. »
Observers believe that the Basel Convention is Rose 3 main act carried out by the Basel Committee on Banking Supervision for about a repeat of the global crisis that began in 2007 in the mortgage market of high risk in the United States. The agreement includes members from 27 countries, including Saudi Arabia, are applied in stages starting in 2013 up to 2019.
One of the main terms of the agreement to raise the original capital of 2 to 4.5% of risk assets the ability, and the capital is to determine, according to 14 criteria strictly, in addition to the allocation of 2.5% additional of those assets to become a minimum original capital result, 7%, and in the case of banks exceeded these percentages will face holders owners stock limits on bonuses and profits.