No relationships are more important to corporate treasurers than their relationships with the banks that provide them with credit. But companies’ ties to their banking partners could be strained in coming years as large banks adjust to the new capital requirements set forth by Basel III. At the same time, companies’ growing use of SWIFT and other services to link to their banks may make it easier for corporate treasuries to shuffle their banking relationships.

The implementation of Basel III capital requirements is expected to push the cost of credit higher and make banks a little choosier about which companies they offer credit. Meanwhile, Basel III’s liquidity coverage ratio, which evaluates a bank’s ability to fund itself over a 30-day period of financial stress, puts a premium on companies’ operational balances—such as those associated with payroll or accounts payable—on the grounds that such deposits will be stickier. Short-term deposits that are not linked to operations will become less attractive to banks, since banks will be required to hold more reserves against those deposits. And Basel III’s leverage ratio could limit the total amount of lending banks are able to do.

Different countries will implement the Basel III capital requirements in different timeframes; in the United States, the rules start to kick in at the beginning of next year.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.