YEREVAN, February 1. / ARKA /. The transition of Armenian banks to Basel III will start in 2014, the chairman of the Union of Banks of Armenia Ashot Osipyan told a Thursday news conference at Novosti International Press Center.
“The main task of the Armenian banking system in 2013 will be preparation for the transition to Basel III. We will try to implement the preparatory work so that to start in 2014, step by step, the process of introducing new principles and requirements “, he said.
Basel III (or the Third Basel Accord) is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and scheduled to be introduced from 2013 until 2018. The third installment of the Basel Accords was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. Basel III will require banks to hold 4.5% of common equity (up from 2% in Basel II) and 6% of Tier I capital (up from 4% in Basel II) of risk-weighted assets (RWA). Basel III also introduces additional capital buffers, a mandatory capital conservation buffer of 2.5% and a discretionary countercyclical buffer, which allows national regulators to require up to another 2.5% of capital during periods of high credit growth. In addition, Basel III introduces a minimum leverage ratio and two required liquidity ratios. -0-
