Basel III Will Hit the Real Economy, Say Corporate Treasurers
Over half (57%) of corporate treasurers in western Europe expect that Basel III regulations will have a negative impact on their company’s performance, according to a survey by EuroFinance. In addition, 61% think that banking regulators do not understand the impact of their regulations on corporate and trade finance. They appear to endorse the view of many bankers that the Basel III regulators have not paid sufficient attention to (or are unconcerned by) the impact of their regulations on corporate bank clients.
Sensitivity to the issue was strongest in Europe, possibly because the euro crisis is already causing significant difficulties for European companies’ ability to raise funds. Commentators also note negative effects on the cost of funding, the cost of using derivatives and the costs of trade finance.
“Basel III is the regulators’ response to the excesses of irresponsible investment banking and retail lending – intended to safeguard the real economy. However, many commentators now argue that Basel III will have a negative impact on the banks’ ability to lend to corporates, to fund trade finance and on risk management via OTC [over-the-counter] derivatives. This survey puts meat on the flesh of those commentators’ arguments,” said Katharine Morton, managing editor at EuroFinance.