Basel III and its implementation challenges and solutions in Singapore.

• Main Authors: Tran, Ngoc Lan., Chen, Daixi., Tang, Alton Kai Zhong.
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2012
• Subjects: DRNTU::Business::Finance::Risk management
• Online Access: http://hdl.handle.net/10356/48104
• Institution: Nanyang Technological University

The financial crisis in 2007 and its aftermath have critically damaged world economy with no signs of recovery until recently, and have been compared to the Great Depression in 1930. Indubitably, one of the reasons that caused and worsened the crisis was the imprudence in which banks and financial institutions managed their risks and capital holdings. It raised the need for industry reform, leading to G20’s Basel III proposal in November 2010 to strengthen the “global capital framework”. It intended to cope with financial distress by imposing stricter rules regarding capital and liquidity requirements, with a focus on “quality, transparency, and consistency”. Due to the far-reaching impact of the Basel III regulations on the banking industry worldwide and the importance of Singapore as a regional financial hub, our group is interested in finding out the implications of the new Basel Accord to the major local banks, namely the Development Bank of Singapore (DBS bank), the Oversea-Chinese Banking Corporation (OCBC bank), and the United Overseas Bank (UOB bank). Hence, this paper seeks to examine the Basel III accord, especially the changes to the regulations compared to its precedents Basel I and Basel II standards. Concurrently, we’ll also focus on Monetary Authority of Singapore (MAS) guideline – Notice 637 - of Basel III implementation in Singapore [MAS, 2007], while exploring the difficulties of implementation of Basel III, the challenges the banks face, and solutions for the main challenges and difficulties. Our preliminary research was based on readings of journals and articles using published databases, library resources, and Internet resources. We also conducted an in-depth interview with a risk analyst, June, to get a professional perspective on Basel III regulations in Singapore’s context. After completing this research paper, we conclude that although Singapore’s regulations are more stringent than Basel III standards, the banks have fared much better compared to their international counterparts.