After many years in the making and the subject of much debate and lobbying, the Basel Committee on Banking Supervision has published today its revised capital standards for the Trading Book.
After many years in the making and the subject of much debate and lobbying, the Basel Committee on Banking Supervision has published today its revised capital standards for the Trading Book. The rules which are due to come into force in 2019 are estimated to increase market risk capital requirements by 40% on a weighted average basis. Whilst this is down versus the previous estimates and will therefore provide some relief to the industry, it still represents a material increase in capital requirements.
Rob Smith, Banking Director, KPMG – “We welcome the adjustments the Basel Committee have made in the final standards, the Committee have clearly recognised the concerns flagged by the banking industry. However, the impact on capital is still significant and in a world with low returns on equity the inevitable question of the viability of certain trading businesses will be posed. Also the unanticipated consequences of the changes to product pricing, market liquidity and the potential shift to shadow banking will no doubt become clearer in the months ahead.”
Now the long-awaited rules have finally landed the real work for the banks begins. Banks will be assessing the viability of trading businesses and the hard work of re-plumbing the market risk infrastructure will start. We estimate that implementation costs over the 3 year period for each of the largest banks will be well in excess of $100m”.
For media enquiries, please contact:
Erfan Hussain, Senior PR manager
T: +44 (0) 207 7694 4208
M: + 44 (0) 7768 043447
Follow us on twitter: @kpmguk
KPMG Press Office: +44 (0)207 694 8773
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.