Asia-Pacific banking jurisdictions set to implement Basel capital standards, Malaysia to start in January 2025

KUALA LUMPUR: The majority of Asia-Pacific banking jurisdictions are set to take the latest global iteration of Basel capital standards in their stride, according to Fitch Ratings.

In a statement, it said banking groups in most markets in AsiaPacific have been able to absorb the moderate increases in capital requirements required under the final Basel III standards due to prevailing conservative regulatory approaches and less extensive use of internal models within the region.

“Few have implemented the rules in full so far, but we expect the transition will not have a substantial impact on capital requirements over the next two years – by which time adoption should be complete in most major Asia-Pacific jurisdictions,” said the credit rating agency.

It noted that China launched its domestic implementation of final Basel III at the start of 2024, and it would be followed by Japanese internationally active banks from end-March.

Fitch said the Japanese megabanks are not expected to report a significant impact in the first year of implementation, with the exception of Mitsubishi UFJ Financial Group, Inc (A/Stable/a-) where removal of capital floor-related buffers would reduce its overall riskweighted assets.

“Singaporean banks will go live under the new regime from July, and then Hong Kong and

Malaysian banks from January 2025.

“We believe they will do so largely faithfully, since authorities in these major systems are Basel Committee members, and so committed to applying the final Basel III framework,” it said. — Bernama