Other banks should take cue from StanChart on Basel III compliance: Analysts
14 October 2010
According to Standard Chartered other banks could be forced to follow its lead in raising fresh capital. The bank has launched a £3.3 billion rights issue to comply with Basel III norms that will take effect in 2019.
With the fresh capital infusion, StanChart's core Tier 1 capital ratio, the key measure of financial strength would rise to 11 per cent from the current 9 per cent giving the bank a head start in aligning with Basel III rules agreed by international regulators last month. (See: Standard Chartered plans fully underwritten £3.3-bn rights issue)
Though banks have till 2019 to comply with those rules, according to StanChart CEO Peter Sands, it was clear global regulators would push for early compliance.
He said, ''We think most regulators will see Basel as the minimum. Many will go further faster''.
The UK's Financial Services Authority, StanChart's main regulator, has voiced intentions to go further than the Basel III minimum of a 7 per cent core Tier 1 capital ratio. It is widely expected, though, that it would make 10 per cent the threshold for Britain's big banks.
Some believe the UK would likely go for accelerating the process towards compliance as has happened in Australia.