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DBS chief warns of Basel fallout 

October 9, 2014
Manju Dalal, Lianting Tu, IFR Asia

As Asian countries roll out Basel III frameworks for their banks, the CEO of Singapore’s biggest lender has warned that the more stringent bank capital rules for the already well-capitalised local lenders may hurt economic growth in the region.

“Asia’s banking system is already strong as (banks) generally emerged unscathed from the global financial crisis. If the new rules try to make it super strong, what gives is the capacity of the banks to provide credit,” said Piyush Gupta, CEO at DBS.

Gupta’s warning comes amid mounting frustration among Asian bankers that the third version of the Basel framework is a poor fit for the region’s fast-growing emerging markets. In particular, critics argue that high risk weightings for emerging-market lending mean that Basel III is pushing up the cost of capital for Asian banks unnecessarily, ignoring actual default rates and the fact that many banks in the region already enjoy significant state support.

Read more: IFR Asia

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