General words
Banking governance: Basel 3 and our reality is After the US subprime scandal, Basel Committee was introduced and government came forward to save and take enlightenment to the crumbling banks of The global financial crisis in 2007. In order to tackle the emergency losses, the minimum capital tied up in the banks through Basel 2 was not enough. The formation of Basel-2.5 and Basel-3 are from this perception. At the first quotation, the definition of market risk has been revised in which the capital increasing of all the banks engaged in the trading business is to be tried. Sesoktatite capital preservation has set a new standard, which will be fully implemented in 2019.
The aim of Basel-3:
The quality of bank capital and to maintain continuity, by taking additional loans from the banks to stop investing in risk-based capital protection, short-term funds to reduce dependence on the banks (of the subprime crisis situation such funds must pay more made vulnerable), and the financial health of banks, to be published.
Given the financial crisis that shook the world in terms of the failure of many opinions, but Basel-II True, it did not take some risk during the period, the banks did not have the capacity to manage. Oxford University researcher Ranjit Lal's comment is significant in this context; Basel II is not a solution to the current chaos, rather than the underlying causes.Greek security expert 'Dmitry Cheraphese' Basel-II was responsible for the failure of several reasons: the implementation of the long delay, given the freedom to amend the commercial banks, more dependency on the independent rating agency to verify credit susceptibility.
Given the financial crisis that shook the world in terms of the failure of many opinions, but Basel-II True, it did not take some risk during the period, the banks did not have the capacity to manage. Oxford University researcher Ranjit Lal's comment is significant in this context; Basel II is not a solution to the current chaos, rather than the underlying causes.Greek security expert 'Dmitry Cheraphese' Basel-II was responsible for the failure of several reasons: the implementation of the long delay, given the freedom to amend the commercial banks, more dependency on the independent rating agency to verify credit susceptibility.
According to him, the strict surveillance of the advantage gained from Basel II, but it is apparent that there is flexibility for the banks. Dmitry Basel III in his famous book, The Devil in Global Banking and wrote, The government and the regulators, the nondescript (hybrid) capital risks, customer credit ratings and tasteless speculation activities include the financial means to do was sit and pretend to be disabled, The non-stop money machines to meet social or commercial purposes, rather than for the sake of his work has been. Curiously forgot to commercial banks, their first and foremost role of the institution as a recipient of deposits'. Dmitry laments this critical moment that 2007 of the world's financial regulatory institutions, as well as the US subprime symptoms and then, pointed to the government, it is clear Because he meant 'tasteless financial instrument '(unsavory Financial Instruments) to paint the name on the credit equipment mean the high plunderer. So the American glass-Steagall act Basel-3 through legislation, says the need for global restoration.
General readers should be built, in 1929 the high declination of American stock market policymakers quarter after the Great Depression and later realized, the mastermind of this disaster commercial banks. Because they ignore the main banking activities were more enthusiastic to invest in the share market. Even as the share of its own capital investment, the depositors' money by investing in a high unlimited risk.Such activity was made in 1933 to prevent the banks from the glass-Steagall act, which is a clear line between the commercial banks and investment banks is made. It was abolished in 1999, 66 years after the enactment of the law against a new law was introduced, allowing banks to own stock brokerage houses are able to invest.
However, the bank's huge capital and a large share of the activities that could contribute to the immense body has to draw the line between banks and investment banks. This line is not very effective because the Banking Act reinstated Dmitry glass-Steagall claimed. Dmitry wrote in his book, Commercial banking is not a secure individual, family or organization can not be confident about the security of their money deposited in the bank to be able to make payments, settlement, money transfer, or credit clearing to rely on.
To prevent or to manage this type of financial mismanagement and corruption, a substantial amount of capital banks must keep in reserve for the implementation of the introduction of Basel -3.Because taxpayer money to rescue banks capital deficit able repetition is not recommended. Basel-II capital than the Basel-3 in the re-definition of the important elements of the system has been further integrated. Designation of new capital from the third level (Tier 3), besides the capital (Tier 1) and the second level (Tier II) capital has been kept in order to strengthen the first level.
According to the document of Basel-3, the first level capital is 'Going-Concern Capital'. It's two parts again, common equity tier (level) 1 and the additional (additional) level 1. The first will be paid up capital, share premium, statutory reserves, general reserves and undistributed profit (retained earning), and so on. According to the document, the second level of public capital -3 Basel Capital Concern. In addition, the liquidity crisis banks have been prepared to uphold the protection of liquidity ratio (liquidity coverage ratio) and net stable funding ratio (net stable funding ratio). A month-long crisis in the first period and the second is to preserve liquidity necessary to meet the one-year liquidity provision system.
This document does not go into the technical details of the new word is, it's such a mechanism, through which banks during the financial crisis, with its capital in order to cope with adverse circumstances. In order to ensure the safety of these banks will be enough to save the capital.
Another notable Loading documents Basel-3 minimum capital treasures of additional capital (Capital Conservation Buffer), which can be tackled with a crisis situation, the lack of capital. The banks will have to create a buffer from its own sources, namely the distribution of dividends, repurchase of its own shares, bonus, etc. employees.If capital can be collected from other sources, it is possible to create these additional buffer. As part of the implementation of the Basel-3, from 2016 to dec-2019 this additional capital like respectively .625%, 1.25%, 1.875%, 2.5% have to be reserved.
If any of the banks to maintain capital above the minimum rate of all sectors of the buffer may not be the bank of any cash dividend or bonus will not be able to pay. However, only with the prior approval of the Central Bank will be able to issue bonus shares. Thus, in various sectors and the provision of capital by maintaining a minimum capital adequacy rate from 2016 to since 2019 will be respectively 10.625 %, 11.25 %, 11.875 % & 12.50 %.
Basel-3 under the instruction has been given to the preservation of capital, the arguments against him have been raised from various banks and government, Dmitry them in his book merely for their political gains, 'hypocrisy', argues strongly criticized. He is the Chief Financial Officer for the failure of the Basel capital instrument, the chief executive and managers responsible for maintaining the provisions criticized, It is the capital adequacy of the budget and the actual achievements to constant surveillance. Basel-3 Full implementation of the period until 2019, he expressed dissatisfaction with the prolonged. According to him, the 'now' should be implemented. It is the implementation of the long-term and other incoherence, he has called 'great compromise' as well.
His book does not show much Dimitri anger, Bangladesh Feel free to talk in terms of the Basel document set a minimum capital of 8 percent, but the rates have been set for our banks to 10 percent, up 1 percent to 50 percent in 2019 with buffered capital. We, like other countries, to protect the capital from the Basel Committee for concessions did not eve. Dmitry dissatisfaction or concern does not apply to us for our banking profits should smugness.
Junk credit rating agencies by the start-up of some of our financial health of the bank or the borrower's corporate credit rating of some banks in the developed world compared to the apparently acceptable, though bargaining our banking situation is not too strong.The new generation of banks that preserve capital in difficult conditions to protect the shore can not play at all, we will continue with the truth so that the banks can manage their own capital without any adverse situation.