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BASEL BITES: TREASURERS ALREADY HIT HARD BY BASEL III

New EuroFinance index reveals rising treasury pain

  • New index measures impact of Basel III reforms on corporate banking products
  • Surprising level of impact being felt now
  • Core treasury products affected already
  • Differential impact depending on location and size of corporate

Over a third of corporate treasurers already feel that the pricing and service they get from their banks has been negatively affected by bank regulations. A further 48% expect them to deteriorate in future. That was the key finding of the EuroFinance Basel III Index©.

The index is designed to provide a measure of the impact of the Basel III bank regulations on the products and services corporate treasurers rely on the most. Every six months the index will be updated, monitoring the ongoing shifts in the price and availability of core treasury products.

The first iteration of the EuroFinance Basel III Index represents the responses of 227 treasury executives to a series of questions about the pricing and availability of core risk management, credit and cash management products and services. The answers to these questions are assigned weightings that reflect the relative importance of each product/service and the scores are combined to create a measure of how many more treasuries are being impacted and in what areas.

Surprisingly, even though many of the banks’ Basel III deadlines are some way off, the index shows that a significant number of treasurers are already experiencing significant changes to their operating environment: from a base level of 100 on November 29th 2014, the initial index calculation is 123 on May 29th 2015.

Significant service deterioration already under way

  • 38% of companies already feel that the pricing and service they get from their banks has been negatively affected by bank regulations. A further 46% expect them to deteriorate in future.

Prices for core services increasing

  • 24% of companies who use term bank credit have seen a price increase

Bank service upheaval

  • 40% of companies have had a bank withdraw services from a country in which they operate
  • 22% of companies with a pooling arrangement have had the service changed or withdrawn
  • 23% of companies have had a bank refuse a deposit

Location and size matter; are surprising

  • 45% of companies with revenues above USD10 billion have had a deposit refused versus 14% of companies with revenues below USD1 billion.