Basel III enforced in Thailand in 2013
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The Bank of Thailand has issued 7 directives, to immediately apply the Basel III rules on the capital ratio of local and foreign banks operating in the Kingdom.
In the statement, the central bank said that Thai banks' capital ratio is strong enough to comply with the Basel III immediately.
Starting from January 1, 2013, local and foreign banks in Thailand must maintain the capital adequacy ratio at at least 8.5 per cent of risk assets, which is unchanged from the current requirement. For Thai banks, tier-1 capital must be at least 6 per cent, including minimum 4.5 per cent of common equity.
The Bank for International Settlements (BIS), the central bank of central banks, drawn up the Basel III rules in light of the 2008 financial crisis.
"Though Thai banks are slightly impacted by the financial crisis and their activities are not exposed to the same risks as their peers in crisis-hit countries experienced, the Basel III capital adequacy rule is in line with the BOT's main supervisory goals - strengthening Thai financial institutions' capital and risk management system, as well as demonstrating Thai institutions' compliance to international standards," the central bank said.
Thai banks' capital adequacy ratio now stands at 16 per cent of risk-weighted assets. In the first three quarters of this year, their combined net profits were tuned at Bt135 billion.
Aside from tougher requirements on risk management which will affect the capital adequacy ratio, the Basel Committee on Banking Supervision (BCBS) also drew up tougher requirements on the leverage ratio. This will affect banks' activities as well as liquidity-related risk management.
The Bank of Thailand said that it is studying the regulation and analysing the repurcussioins, before applying the regulation with financial institutions in Thailand.
