The second wave of Basel III rules may continue to be delayed in Asia-Pacific (APAC) due to a lack of progress in other global markets, says Fitch Ratings.

“Some APAC regulators have slowed-down the implementation of certain Basel III standards (Singapore, Australia, Hong Kong) as a reaction to a delayed implementation by their international counterparts,” says a recent Fitch Ratings report on Asia-Pacific countries’ progress implementing the Basel III framework. However, the credit profiles of Asia-Pacific banks are unlikely to be significantly affected.

“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,” says the report.

Although behind the initial intended schedule, Basel Committee on Banking Supervision (BCBS) member countries in the Asia-Pacific emerged largely compliant from the regulatory consistency assessment programmes in 2016. The only countries yet to adopt the latest BCBS standards include Macao, Mongolia, Sri Lanka, and Vietnam.

“Looking further ahead, we expect APAC regulators will continue to embrace the Basel Committee's risk-weighted asset initiatives,” says Fitch.