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Israel asks banks about impact of new liquidity rules
February 9, 2014 / 1:11 PM / 4 years ago

Israel asks banks about impact of new liquidity rules

JERUSALEM, Feb 9 (Reuters) - Israel’s banking regulator on Sunday asked the country’s banks to provide details on how they can comply with a liquidity requirement that is part of new global rules to strengthen banks after the financial crisis.

Israel plans to implement gradually the liquidity coverage rule in 2015 that aims to ensure banks have enough assets that can be converted quickly into cash. This will reflect the amount of liquid assets a bank must hold relative to its total forecast liquidity needs over the next 30 days under a stress scenario.

“Although the banking system in Israel displayed resilience during the recent global crisis, we have to be smart enough to learn from the lessons of the crisis, so that the banking system will continue meeting the top international standards,” Supervisor of Banks David Zaken said.

“The implementation of the liquidity part of the Basel III Framework is an important further step toward achieving this goal,” Zaken said.

A central bank spokesman said that since the new global rules - known as Basel III - are being implemented differently around the world to meet local conditions, Israel is asking banks whether they will be liquid enough to meet the requirements and then a directive from the supervisor will be issued.

Under the rules, Israeli banks will have to meet a 60 percent coverage by January 2015 and increase 10 percentage points each year until January 2019, when a liquidity coverage ration of 100 percent will be required.

Zaken has also issued a directive in which banks must hold core capital equivalent to at least 9 percent of their risk-weighted assets by Jan. 15. He has imposed an additional goal of 10 percent on Israel’s largest banks - Hapoalim and Leumi - by January 2017.

All of Israel’s top banks have a core capital ratio - a measure of financial strength, 9 percent. (Reporting by Steven Scheer. Editing by Jane Merriman)

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