22/1/2018/Fitch Ratings

Fitch Ratings says in its survey of 2018 regulatory trends that the finalisation of the Basel III reforms signals peak bank regulation has passed, but tighter supervision is likely.

The 2018 global bank regulatory outlook is stable, as Fitch expects no significant shifts in direction from new regulation. We expect authorities within the main economies to focus on implementing in-flight regulations and promoting strong supervisory standards, and for international cooperation to increase. For developing markets, adherence to supranational requirements (the IMF, the World Bank) will continue to be the main determinant of regulatory reform agendas, alongside a focus on maintaining financial stability.

While not strictly a 2018 theme, newly finalised “end-game” Basel III amendments coming into force from 2022 may lead to increased capital requirements for banks that rely heavily on internal models with low-risk portfolios. But many banks will not see increase in overall capital requirements and some banks that use the standardised supervisory approaches may see their capital ratios improve under the new regime.