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Jessica Darnbrough
Australia’s banks could struggle to fund new loans within three years if changes are not made to Basel III, a leading aggregator has claimed.
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Speaking to The Adviser, Vow’s chief executive officer Tim Brown said in two or three years time, as money begins to flow from deposits back into equities, Australia’s lenders could have real problems funding new loans if changes are not made to Basel III.
The Basel III accord, which was originally developed in response to the deficiencies in financial regulation revealed by the Global Financial Crisis, was agreed upon by the members if the Basel Committee on Banking Supervision in 2010.
Since that time, Mr Brown said Vow has issued a number of recommendations to the government about Basel III, all of which have been largely ignored.
“The big concern for the industry at the moment, is the state of the funding markets,” he said.
“My concern is with Basel III. I believe funding will continue to get tighter and will hurt banks and borrowers down the track, unless the government gets in and makes changes to Basel III.
“We have put forward a number of recommendations to the government through the Mortgage and Finance Association of Australia and they have all been ignored. My biggest concern is that in two or three years time as money flows from deposit back into equities the Basel III requirements will actually see a drying up of funds for lending. And unless the government does something now we could have a real problem funding new loans in the future.”
