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Sarb to stick to Basel III timelines

Jan 10 2012 18:00

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Johannesburg - The South African Reserve Bank (Sarb) says it will not lengthen the time lenders in the country will have to comply with the new global Basel III banking rules, as they will have enough notice by which to implement the regulations, a senior official said.

“The South Africa Reserve Bank remains committed to the time lines stipulated by the Basel III regulations,” Hlengani Mathebula, the bank’s head of Strategy and Communications Department, told Reuters.

“One must remember that the time lines contained in the Basel III regulations allow for sufficient planning and preparation. The whole global banking industry is facing the same challenges.”

Mathebula said a decision on the new regulations would be made “shortly” to allow the banks enough time to beat the 2015 deadline for liquidity requirements.

South African lenders have plenty of capital, but due to their reliance on short-term funding, they are likely to face big hurdles to increase their liquid assets. The rules have been created to help avoid another financial meltdown and taxpayer bailouts.

Tough regulation helped lenders in Africa’s biggest economy - where banks such as Absa Group [JSE:ASA] FirstRand [JSE:FSR] Standard Bank Group [JSE:SBK] and Nedbank Group [JSE:NED] are relatively well capitalised - through the worst of the global credit crisis.

Mathebula said that although the country’s banks are financially sound and profitable, the likelihood of a takeover bid by a global bank with a broader African strategy in mind was slim due to the global financial turmoil.

HSBC walked away from talks to buy a majority stake in Nedbank, South Africa’s fourth-largest lender, in 2010.

“The current global financial climate combined with the future Basel III capital requirements may, in the short term at least, make it unlikely but not impossible for an approach by a foreign bank,” he said.


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