FRANKFURT (MNI) – The following is the third part of the annex of
a press release on capital and liquidity reforms issued Monday by the
Bank for International Settlements, in Basel, Switzerland.
B. Net stable funding ratio (NSFR)
The Committee remains committed to the introduction of the NSFR as
a longer term structural complement to the LCR. Nevertheless, the
initial NSFR calibration as set out in the December 2009 proposal needs
to be modified. The main concerns related to the calibration of the
standard and the relative incentives across certain business models, in
particular retail versus wholesale. A number of adjustments are under
consideration:
–Retail and SME deposits: Raise the Available Stable Funding (ASF)
factor for stable and less stable retail and SME deposits from 85% and
70% to 90% and 80%, respectively.
–Mortgages: Lower the Required Stable Funding (RSF) factor to 65%
(from 100%) for residential mortgages and other loans that would qualify
for the 35% or better risk weight under Basel II’s standardised approach
for credit risk.
–Commitments: Lower the extent to which off-balance sheet
commitments would need to be pre-funded, by lowering the previous
requirement of 10% stable funding to 5% RSF.
–Transition: Carry out an “observation phase” to address any
unintended consequences across business models or funding structures
before finalising and introducing the revised NSFR as a minimum standard
by 1 January 2018.
–In addition to the potential changes listed above, the Committee
will continue to consider whether to apply some amount of recognition to
matched funding within the one-year time frame, as well as some other
structural changes to the proposal. The Committee will issue a set of
proposals on the NSFR by the end of this year which will be subject to
testing during the above mentioned observation period.
[TOPICS: M$$EC$,MT$$$$,MGX$$$,M$$CR$,M$X$$$]
