Banks Brace For Basel III Liquidity Management Impact

New York, NY (PRWEB) August 02, 2011

The introduction of Basel III, which changes the way banks approach liquidity management and data reporting, will have a marked impact on banks profitability and overall business models, according to Ernst & Youngs Global Banking & Capital Markets Center.

Basel III is the first attempt to globally harmonize regulation and provide a platform for each country to standardize its liquidity guidelines. These new standards will require an increase in liquid assets held by banks and also will require that these assets be of higher quality. As a result, banks costs and profitability will be affected.

But liquidity is just one factor banks will need to consider. To comply with Basel III, banks of all sizes are facing costly operational and technical requirements related to data reporting.

Data and technology infrastructures are where institutions are beginning to invest heavily, according to Peter Marshall, Ernst & Young Principal in Financial Services. Banks will need to pull together information across the organization, slice it and dice it in lots of different ways, and provide it to the regulators.

Marshall outlined the operational impacts of Basel III that banks must consider:

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