Dubai: Mashreq Bank sees little impact of the new Basel III rules on the bank's operations as its Tier 1 capital already exceeds the new requirements, a senior banker said.
"We don't see that much impact of Basel III on our business. Our Tier 1 capital is 15 per cent, more than double what's required by 2019," Abbas Hasan, managing director and head of investment banking at Mashreq Bank, told Zawya Dow Jones in an interview on Wednesday.
"Our capital adequacy ratio is 15 per cent and our Tier 2 capital is 20 per cent," Hasan said.
Basel III, the landmark regulatory agreement fin-alised last weekend in the Swiss city of Basel by the world's leading financial regulators, will require banks to gradually build up their capital cushions starting in 2013, and will give them until 2019 to comply with the new rules.
Starting 2013, banks will need a common Tier 1 ratio of at least 3.5 per cent, up from the current 2 per cent. The requirements get tougher each year until 2019, when the minimum ratio will be 7 per cent. The rules aim at preventing another major global financial crisis.
"This is still in the very early stages. We'll have to see what things come on restrictions and limitations on lending but we follow a very strict regime anyway," Hasan said.
More stringent
An official at the UAE's central bank said on Wednesday the new rules governing the amount of capital banks need to set aside against potential losses won't have a major impact on lenders in the country since local requirements are already more stringent.
The central bank will however review its capital adequacy requirements for the industry early next year, Saif Al Shamsi, senior executive director for the central bank's treasury department, said.
Mashreq Bank last month said its second-quarter net profit fell 54 per cent to Dh202 million compared with Dh435 million the year earlier, as it continued to put aside cash for bad loans.
