July 2017

As banks continue to implement Basel III capital requirements in line with the phase-in dates set by the Basel Committee on Banking Supervision, many are assessing their approaches to deposit optimisation, especially considering altering views on intraday liquidity and rising interest rates. Speaking to The Banker for its “Financial Intelligence Guide”, Deutsche Bank’s Koral Araskin, Liquidity Manager, Institutional Cash Management, discusses the most significant elements of Basel III regulation, and assesses how banks can best recalibrate in this new environment

A key element of the Basel III regulation relates to its stricter definition of the term “operating cash”. Araskin describes that this poses four key considerations for banks: they must be able to identify when liquidity is “operational”; when it is non-operational; what it means for service providers who support clients’ liquidity and their intraday liquidity monitoring; and, how clients can maximise the return from their relationships with those providers.

Of course, Basel III also creates a number of other challenges, with Araskin outlining the impact of the leverage ratio, the liquidity coverage ratio and net stable funding ratio on deposits and cash management.

In an environment where not all deposits are considered equal, Deutsche Bank is closely monitoring the liquidity portfolio worldwide to better understand its client and currency mix, with a focus on strong partnerships and constructive dialogue. Indeed, as Araskin outlines, by being agile and better understanding liquidity patterns, banks may find not only challenge, but also opportunity, in the new liquidity landscape.


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