Basel III : its impact on the banking system and the challenges of implementation

Abstract

The creation of the Basel III regulatory framework as a response to the financial crisis has raised many contrasting views. Many bank managers from different countries stated that although the new regulatory accord will increase resilience in the global financial system the new requirements are too stringent for most of banks. The main aim of the study is to highlight the impact that the new regulatory framework will have on the local financial system. Through a number of face to face interviews, the researcher aims to analyse the main challenges faced by Maltese Institutions. The researcher concludes that the majority of local banks will be able to comply with the new capital requirements. However some issues regarding long-term liquidity and leverage constraints can have a negative effect on banks' operations. Also small banks will find it more difficult to comply with the new requirements. It is however felt that the reputation of Malta as a financial services centre will not be effected.