BASEL III: New order

Nov 1, 2013

Incoming global bank regulations offer Latin America’s lenders a new to look at their capital base. Yet most have little short-term need to their models

By Katie Llanos-Small

When Santander Brasil unveiled plans to increase profits under Basel III by reducing its cost of capital, the message from the stock market was clear. The bank’s shares, already recovering from an early-summer sell-off, leapt on the day of the announcement, rising from 6.55 reais to 7 reais each. Over the next weeks, they tracked higher still.

Banks across Latin America — and particularly in Argentina, Brazil and Mexico — have been preparing for Basel III for as long as regulators have been discussing it. But Santander Brasil’s move was a particularly loud signal of plans to adapt.

Only three Latin countries have formally signed up to the Basel framework: Argentina, Brazil and Mexico. All three have already brought the new bank capital rules into force, although the full strength of the requirements is being phased in until 2019. Other regulators across the region, including in Chile,...

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