The final reforms to the global capital rules in response to the last financial crisis are starting to take effect, yet the Canadian banks will be barely impacted, according to a new report from DBRS Morningstar.
The rating agency noted that the so-called Basel III reforms — including revisions to capital, liquidity and leverage requirements for the large Canadian banks — are in the midst of final implementation, strengthening the banks’ ability to weather financial shocks.
“Overall, we expect the revised guidelines to have an immaterial impact on the capital, leverage and liquidity ratios of federally regulated Canadian banking institutions,” the report said.
DBRS also said it doesn’t expect any compliance issues resulting from the new requirements.
“In fact, we generally expect capital ratios to increase between 5 basis points and 80 bps in 2023 now that the first phase of the Basel III reform implementation has begun,” it said.
However, it also suggested that “certain banks might see a decline in capital ratios in later years, broadly offsetting the initial uptick” as the reforms are fully phased in through 2026.