Switzerland

Basel III 

The development of financial market regulation is a necessity that is a result of the continuing internationalization of the increasingly dynamic financial markets. As part of the financial crisis response, regulatory development has also quickened significantly.

The current objectives of BIS include:

 

  • Improving the resilience of the financial sector in order to better absorb future financial or economic shock
  • Improving the risk management and governance
  • Improving the transparency and the requirements for disclosure

 

With respect to the institution’s capital adequacy, the enhancement of regulations includes considerable strengthening of the capital base with regard to both the level as well as the quality. Thus Tier 1 Capital is more tightly defined and a minimum level of 6% Tier 1 capital will be required. In addition, an countercyclical capital buffer is also to be built up. A Leverage Ratio that has already been introduced by the Swiss large banks will also be introduced in Basel III. The Leverage Ratio shall limit the risk weighted assets to a cap of 3% (in relation to the Tier 1 Capital).

The rules that are summarized under Basel III also include, along with the expansion of the capital adequacy regulation, a significant expansion of the guidelines governing the liquidity management of an institution. Basel III policy additionally specifies far-reaching aspects with respect to governance and disclosure obligations.

What challenges does Basel III represent for you?


Basel III will impact your business activities. The expanded regulations will have an influence on the competitiveness of institutions. As shown by the latest business developments, the regulations are not intended at hindering business. The Swiss financial center enjoys a strong reputation worldwide, not least because of its regulations.

With regard to the institution’s profitability (in relation to the deployed capital),  the earning’s power is to be expected to decline due to the strengthening of the capital base. In addition, the implementation of Basel III will bind resources and require sound clarification in numerous individual aspects.

Disclosure is one issue that requires a great amount of attention. The institution must manage the situation such that it is able to meet the expectations of numerous interest groups. These groups are not only regulators, investors and analysts, but also rating agencies that accompany the disclosure with increased attention and which will integrate the disclosure in the ratings.

 

Support by KPMG

 

  • Based on our extensive experience in regulations along with our experience in reporting matters and disclosure aspects, we possess a wide spectrum of experience concerning the implementation of new regulations.
  • Our specialists maintain comprehensive knowledge in banking, including financial instruments, in connection with the corresponding regulatory know-how. We can actively support your firm, not only in the general implementation of the new provisions, but also in the clarification of complex and individual issues.
  • The use of synergetic effects through the combination of business management with the regulatory requirements so that your firm can take advantage of them is an important matter to us.

Philipp Rickert

Philipp Rickert

Partner, Head of Financial Services

+41 58 249 42 13