THE EXPECTED introduction of Basel IV in the local financial industry would likely see an increased demand for capital, FirstRand deputy chief executive Johan Burger said yesterday at the group’s interim results presentation.
Basel requirements are a set of minimum capital requirements for banks set by the Basel Committee on Banking Supervision under the auspices of the Bank for International Settlements, which is based in Basel, Switzerland.
The committee comprises representatives from central banks and regulatory authorities. Right now there are three Basel accords that cover banking supervision and these are Basel I, Basel II and Basel III with a fourth accord in the pipeline.
Burger said what was now expected was a different, robust and standard approach would come into effect and that would lift the minimum level of capital.
“There is no doubt that seeing what is happening from a regulatory perspective we are going to see an increase in demand for capital. So they are going to introduce a different robust standard approach which will lift the minimum level of capital,” he added. The critical thing for FirstRand was to evaluate whether it still had the appropriate mix. He said the group would have to look at its mix with the objective of seeing whether it could maintain the cost of capital. – Banele Ginindza