Regulation: Banks digest the meaning of Basle III
Capital regulators tighten rules; Banks required to set aside more capital
Roldán has warned about the impact of new Basle guidelines
You had been warned. In December, José María Roldán, the head of banking supervision at Banco de España and chairman of a key Basle Committee sub-group, proclaimed that as then unpublished revised bank capital regulations would be nothing less than a "regulatory tsunami". And so they have proved to be. The long-awaited revised bank capital rules from the Basle Committee on Banking Supervision, now dubbed Basle III, were released as the banks wound down for Christmas, and the industry is only now fully digesting what it will mean. Broadly speaking they entail profound changes for the way banks ration and employ capital. That will be felt most by banks with large investment banking activities, institutions that rely heavily on hybrid instruments to prop up bank capital, those that apply leverage to their trading activities, and institutions whose funding programmes are weighted towards wholesale debt markets.