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Fitch: Basel III Implementation in APAC to Follow Global Pace 

May 9, 2017

Implementation of the second wave of Basel III rules might continue to be delayed in the Asia-Pacific (APAC) by a lack of progress in other markets, as regulators in this region have remained reluctant to take a lead in implementing requirements ahead of their global peers, Fitch Ratings says. However, the credit profiles of APAC banks are unlikely to be significantly affected.

We expect most APAC regulators will continue to push ahead with consultations, and most plan to be ready to meet scheduled deadlines, even if implementation is likely to be contingent on international progress. Moreover, APAC banks are still likely to prepare for the new requirements by further building up capital and other loss-absorbing buffers, which will strengthen their financial profiles and underpin ratings.

 Implementation of some components of Basel III in APAC banking systems has already been delayed from the timeline set by the Basel Committee as a result of developments elsewhere. A new standardised approach for measuring counterparty credit risk exposures and revised capital requirements for equity investments in funds and for central counterparties - initially scheduled to be introduced by January 2017 - were delayed by US pushback and lengthy legislative processes in the EU. Those rules are likely to have a greater impact on European and US banks than banks in APAC.

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