RETAIL BANKING | Staff Reporter, Singapore

Weekly Global News Wrap: US regulators to finalise rule for long-term liquidity; Cross-border lending to emerging markets dips in Q2

And Swiss bank UBS doubles Q3 net profit.

From Reuters

A trio of US banking regulators are set to finalise a pair of long-running rule-writing projects aimed at ensuring banks have enough liquidity whilst minimising volatility.

One rule will establish the so-called Net Stable Funding Ratio (NSFR), a long-term liquidity requirement, for 20 large banks. The second rule ups standards on “total loss-absorbing capacity” (TLAC) debt, which is the debt that banks must issue to ensure they have quick access to equity in times of stress.

The new NSFR rule brings to a close a rule-writing project that dates back to 2016, and is the final project from US regulators to bring their rules in line with the 2016 international Basel III standards.

From Reuters

Cross-border lending to emerging markets fell in Q2 2020 for the first time since 2016, mainly driven by a $43b decline in Latin America and the Caribbean, the Bank for International Settlements (BIS) said.

Claims, which are transactions between banks and counterparties across borders, dropped YoY for three of four regions, resulting in negative growth for emerging markets and developing economies (EMDEs) as a whole for the first time since 2016.

On a global level, banks’ cross-border claims shrunk by $1.1 trillion in Q2 versus Q1. YoY growth in claims halved to 5% at the end of June from 10% at the end of March. A decline in interbank lending drove the overall contraction.

From Reuters

UBS has doubled its Q3 profit and set aside $2.5b to return to shareholders next year as the Swiss bank reaped the benefits of helping the world’s ultra-rich navigate the COVID-19 crisis.

Net profit rose to nearly $2.1b, handily beating expectations, as clients scrambled to trade and seal deals amidst a boom in markets.

UBS said it has so far accrued $1b for a cash dividend to be paid out next year, and has also set aside $1.5b in capital reserves for potential share repurchases after regulators called on banks to conserve capital.


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