Research & Thoughts

Basel III: Could Unintended Consequences Create Opportunities?

In September, the Basel Committee on Banking Supervision agreed to increase regulatory capital and liquidity requirements for banks around the world. Despite assertions from regulators that Basel III requirements will lead to economic benefits, Capco believes the regulations could have many unintended consequences for the financial services industry – there is no free lunch.

The accord will have a major impact on industry profitability and capital costs as banks adjust to the new regulatory regimes. Strategic upheaval is likely to follow across the industry as institutions struggle to adapt to newly established rules while anticipating additional, still-to-be-defined changes.

There is an upside, however. In this point of view, we explore the potential impacts of Basel III and describe the types of institutions that might be best-positioned to limit the negative implications of the new regulations.

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