Although the regulations have not yet been fully clarified, the first effects of Basel III are a fact as of 2014. The consequences for banks are very significant, and include the following:
- new minimum capital levels, return targets, pricing, and selection of credit and long-term strategy of the bank;
- funding and balance structure: interbank relationships and product range;
- methods of capital requirement: systems, control, data and IT;
- capital and the use of liquidity by business lines: business unit management and performance management.
Capital management policy
As a result of these changes, the banks should ask themselves if the capital management function is still responsive to the needs of the organisation itself, customers, investors and supervisors. Is the capital management policy still in line with your strategy and risk acceptance? To review your capital management policy and the capital management function of the economic capital model and to reshape the services provision may help to:
- save capital costs and to use capital as efficiently as possible;
- create a better connection between capital and company objectives;
- increase the effectiveness of the capital management function and to make it more responsive to the demands of the organisation.