View more on these topics

Basel III to raise credit cost

The price of credit offered by banks to small businesses will rise due to Basel III, according to the British Bankers’ Association.

Executive director of prudential capital and risk Simon Hills says the changes will further the correction of credit-pricing already under way.

He says a combination of the current correction in pricing and the risk-weighted capital reserve requirements in Basel III will see the cost of credit for different areas increase in line with the risks they pose.

Hills, who is the chair of the International Banking Federation’s Basel working party, says lending to an SME is riskier and requires twice as much regulatory capital as lending to bigger businesses. He says: “The price of credit will go up. As to the extent it rises for mortgage lending versus credit cards versus small and medium enterprises, we will have to wait and see.”

He is calling for the Consumer Protection and Markets Authority and Prudential Regulation Authority to have a central information repository on firms to cut costs. He says: “I do not want to have to submit the same types of data to both authorities.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm