Gilbert Kohnke, chief risk officer at OCBC Bank, discusses regulatory and risk management challenges ahead, with Basel III compliance being banks’ chief concern.
December 04, 2013 | Bertrand PigeonThe global financial industry can expect to face significant challenges in 2014, with pressure on banks to maintain higher capital levels and meet imminent Basel III deadlines. This pressure will impact banks’ abilities to continue serving their customers the way they did before; with efforts to drive balance sheet growth becoming increasingly harder. Multiple regulatory changes have contributed to the impact on the banking industry, whether in terms of liquidity, technology, or risk management requirements.
Singapore is one of the leading countries in terms of Basel III implementation, with OCBC Bank, the strongest bank in the city state - according to The Asian Banker 500 strongest bank rankings (2013 edition) - boasting over 800 staff in its risk management division, under the watchful eyes of chief risk officer Gilbert Kohnke.
Speaking on the rapidly evolving banking landscape, Kohnke envisioned a hike in interest rates within the industry over the next three to five years. According to Kohnke, this “will lead to a period of adjustment as banks will be switching from a period of very low interest rates.” The increase in interest rates is a double edged sword for banks; on one hand, net spreads typically improve but on the other hand, some of the customers who may have gotten used to more leverage will have to face a liquidity crunch.
“Most companies in Asia are quite conservative,” Kohnke said, adding that he does not foresee a material effect on the corporate side. On the consumer side, however, Kohnke said that “the industry has seen consumer debt levels increase across Asia; this could be source of potential softness.” With Singapore possessing one of the highest household debt levels, relative to GDP, in Asia – at 75%, a 12% increase from 2010 – the aforementioned expected hike in interest rates coul...
Categories:
Basel III, Credit Risk, Operational Risk, Regulation, Risk and Regulation, SingaporeKeywords:Gilbert Kohnke, OCBC Bank, CVA, RWA, Risk Appetite, Risk Culture, Market Risk, Technology Risk, MAS
