Industry representative: Basel III will reduce ROE of banks in Philippines

Lorenzo Tan, president of the Bankers Association of the Philippines, stated at a recent industry event that the financial performance of lenders in the nation will likely be hampered in 2014 as a result of implementing the Basel III requirements.

"Generally, Basel III will lower your expected net income … (the impact) varies from bank to bank," Tan told members of the media who were present at the Philippine International Banking Convention held in Makati City, according to The Philippine Star. "We just have to find other ways to bring it back to the old level of shareholders' return on equity."

In addition to potentially generating lower returns, banks in the Asian nation will have to shore up their existing resources and meet higher guidelines for their capital adequacy ratios, Philippine Daily Inquirer reported. Tan stated that many of these organizations will need to reassess some of their current operations in order to hold the proper capital levels.

Under the nation's interpretation of the Basel III requirements, lenders in the country will still have the same CAR to meet, but this measure will have a greater share of common equity than it did before, according to the news source.

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