Basel III and the Latest Requirements on Liquidity Risk Reporting

Abstract

The recent financial crisis and the lack of transparency in the banking industry have been the main arguments for the Basel Committee on Banking Supervision to strengthen liquidity risk regulations. This case study based thesis aims to investigate how Skandinaviska Enskilda Banken, SEB, will be affected by the Basel III guidelines concerning the banks liquidity risk reporting. We conduct interviews with representatives from SEB, the Swedish central bank, the Swedish Bankers' Association and the Swedish financial supervisory authority. Previous research studies reject one-size-fits-all models and regulations in general, however the recent financial crisis is a motive of introducing a common regulatory framework. This is necessary for preventing financial turbulence. This thesis has provided us with evidence to conclude that the transparency as an enhancer of banking system robustness is not without controversy. Our findings suggest that SEB as a global actor will be affected in terms of competition since the regulation is not harmonized internationally, the quantitative measures will disfavor SEB’s business model and the implementation costs are likely to be transferred to the customers. This thesis show that a common regulatory framework is necessary but the suggested liquidity regulation is not the way to achieve it.