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Basel III-driven liquidity pressure heralds need for vibrant CPs market 

May 20, 2014
Iheanyi Nwachukwu, Business Day

Ahead of the implementation date for Basel III, the associated liquidity pressure which banks are expected to face signposts the need to revive Nigeria’s Commercial Papers (CPs) market.

Basel III (or the Third Basel Accord) is a global, voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity risk. It was agreed upon by members of the Basel Committee on Banking Supervision in 2010-2011 and was scheduled to be introduced from 2013 until 2015. However, changes from April 1, 2013 extended implementation until March 31, 2018.

Less than four years away from the Basel III implementation date, most banks with high liquidity ratio still face the challenge of meeting the financial requirements of their big corporate clients.

MTN, Dangote, Nigerian Breweries are among bank clients who at different times are either awash with or require liquidity for which CPs can serve to remove pressure on banks’ balance sheets.

Read more: Business Day

 
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