“We are very concerned about the many unintended economic consequences of the new Basel III regime.”

Liquidity management is cited as a top area of concentration for senior management and boards.

It has required the most attention from CROs during the past 12 months and reflects continued pressures from the recent crisis, current funding challenges and the complexity and cost of implementing new Basel III requirements. The latter covers:

• The liquidity coverage ratio (LCR)
• Net stable funding ratio (NSFR)
• New liquidity reporting

Boards and risk committees have developed increased liquidity management responsibilities and engaged in heated discussions about the burden and time-demand of new requirements.

Cost of implementing LCR-style requirements

Data quality and availability (81%) and systems (71%) are the top challenges cited in complying with new regulations. Other concerns are intraday collateral and liquidity tracking, aggregation of data across groups, stress testing and content of regulatory returns.

Major concerns around the new regulations have left many feeling uncertain about where the rules will land and upset about uneven implementation across the industry. Many also feel uneasy about the associated costs and implications of embarking on long-term significant transformation initiatives.

UK firms are furthest along in implementing LCR-style requirements

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