As compliance with Basel III makes capital more expensive, big banks are trying to be more selective in the companies they lend to, says new research. Sharp increases in capital costs resulting from Basel III reserve requirements have forced the largest global banks to become more selective about who they lend money to, according to new research.
Although full compliance with Basel III is only expected by the end of 2019, many global banking giants have already met their Tier 1 common capital requirements. In a report released Tuesday, research firm Greenwich Associates says banks have been reshaping their lending strategies to mitigate the costs of compliance. Read the entire CFO.com article here.
“Rather than trying to service a broad range of corporate clients, they are dividing clients into tiers and deploying increasingly expensive capital mainly to companies that show the most potential in terms of overall, long-term profitability,” the report says.