It may appear somewhat hasty, asking if the upcoming credit risk rules are a game changer for the banking industry without being implemented yet. Basel IV is currently emerging, although Basel III is not even fully in place. Nevertheless, the overall market opinion is strong: Banks and markets will face an unprecedented regulatory shock, risk weighted assets (RWA) will increase by two-digit percentage numbers, the burden for IRB banks, due to the output floor, is expected to be high and mortgage business will be heavily impacted. These are the general statements.
The impacts vary within a broad range, down to product areas like mortgage lending and up to strategical implications for capital funding. Our new Whitepaper will shed some light into the new credit risk framework under Basel IV. Implications caused by the new counterparty risk framework are highlighted as well. The RWA implications and market impacts will be shown, frameworks as well as tools will be presented to quantify the impact and deal with the consequences.
- The magnitude of the impact varies depending on the region, business model and portfolio mix. Especially IRB banks focusing in real estate and corporates will be subject to major regulatory impacts
- Challenges will be faced in the strategical response, potential adaption of the business model as well as implementing the new rules including their operational application
- A proper framework allows to rethink the current business and helps to identify key areas to adapt to the new rules
- The business can be analyzed based on the new rules to show potential opportunities under the new context
