SME Financing To Get Costlier Under Basel III

KUALA LUMPUR, July 24 (Bernama) -- Small and medium enterprise (SME) financing will get costlier and more difficult to obtain with the implementation of Basel III, said Maybank Group Chief Risk Officer Dr John Lee.

Source from (Bernama): http://www.bernama.com/bernama/v7/bu/newsbusiness.php?id=965798
Published: July 25, 2013

Source from (The Star Online): http://www.thestar.com.my/Business/Business-News/2013/07/25/SME-financing-to-get-costlier-under-Basel-III.aspx
Published: July 25, 2013

Source from (The Sun Daily): http://www.thesundaily.my/news/779415
Published: July 25, 2013

He said with Basel III, banks needed to have more capital and more liquidity and these will increase costs.

"The discussion now is on the impact of the additional costs and whether they should be absorbed by the banks or pass on to the customers.

"From Maybank's perspective, we want to make sure that we continue to be able to lend to SMEs and be able to ensure that the flow of capital or credits to some of this market are still there," he told reporters on the sidelines of the ASLI Banking Summit 2013 here today.

Lee said due to the stringent requirement under the Basel III, some of the businesses may move their sourcing of credit to unregulated and opaque segment of the financial banking.

"This is where the shadow banking comes from because the regulated banks might be affected by the Basel III requirement, so they may not want to lend to a particular sector.

"But that sector still wants to borrow money. It cannot borrow from regulated banks so it might be going to unregulated institutions," he said.

However, Lee said, Malaysian banking sectors will still be healthy because most of the banks will have already complied with the requirement of Basel III, even before Bank Negara Malaysia introduced the Basel III requirements.

"Malaysia banks always had a healthy capital and the introduction of Basel III wasn't really going to be a significant impact on the local banks," he said.

Basel III is a global regulatory standard imposed by the Basel Committee on Banking Supervision which requires banks to hold an increased 4.5 per cent of common equity and 6 per cent of Tier-1 capital of risk-weighted assets.

-- BERNAMA