(Any ideas from bank-bailout watchers? In South Africa, our banks are
playing quite a game, pretending to be insulated from world trends... in
other turbulent zones, are mortgage-backed securities considered ok
again, given the 30% real estate devaluations that occurred the past few
years in some key markets?)
/Business Day/
SA banks to be advised on eased liquidity
by Stephen Gunnion, January 14 2013, 07:18 |
South Africa's banking regulator will issue a guidance note to lenders
within the next two weeks after global central bank chiefs granted four
more years to meet international liquidity requirements.
Financial regulators meeting in Basel, Switzerland, on January 6 delayed
the full implementation of the liquidity coverage ratio intended to curb
excessive risk in the banking sector. They also expanded the list of
what can be classed as high-quality liquid assets to include equities
and securitised mortgage debt.
South Africa will probably follow the revised timeline, under which
banks will have to meet 60% of the liquidity obligations by 2015 with
the full rule phased in annually through to 2019, banks registrar Rene
van Wyk said on Friday.
The banking regulator would still assess the liquidity of the additional
assets included in the amendments, he said.
"I don't see major benefits or issues as far as the additional
high-quality liquid assets are concerned," Mr van Wyk said.
"Some of them may even be irrelevant in our market, but we must still
assess it."
Reuters reported on Friday that under the new rules, banks could now use
"high quality" residential mortgage-backed securities (RMBS), as part of
a stock of easy-to-sell assets designed to see them through a 30-day
credit crunch.
However, the securities need to have a high investment grade credit
rating, ruling out banks in countries such as Italy, Spain, Greece and
Ireland, whose sovereign ratings were shredded due to the financial crisis.
"RMBS (changes) only help a few banks," said Delphine Lee, a Paris-based
analyst for JP Morgan. "I don't think we're going to see issuance doubling."
For example, credit rating agency Moody's said in September that Irish
loans turned into an RMBS would get a rating of less than A3 --- below
the minimum AA demanded by the new liquidly rules --- because RMBS
ratings are capped by the rating of the sovereign.
"Germany and the UK and other European banks may benefit," said one
senior capital markets source in an Irish bank. "But banks in the
peripheries are in the most disadvantaged position."
/Bloomberg, Reuters/
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