New risk and accounting standards will impact banks’ profits, says Wolters Kluwer experts
In 18 months, Thai banks need to start complying with a new Basel III liquidity risk management standard recommended by the Basel Committee on Banking Supervision. Called the Net Stable Funding Ratio (NSFR), banks will need to manage an interplay of this additional Net Stable Funding Ratio (NSFR) requirement alongside the existing Liquidity Coverage Ratio (LCR) requirement.
The LCR looks at the amount of unencumbered, high quality liquid assets an institution holds over 30 days that can be used to offset the net cash outflows it would encounter under an acute short-term stress scenario specified by supervisors. The scenario has to include systemic shocks and institution-specific circumstances derived from the global financial crisis. It took effect January 1, 2015.