The EU’s prudential rules for banks, known as the Capital Requirements Directive (CRD) IV, could transform the product set that banks make available to their clients, according to Barclays’ global head of treasury products Maurice Cleaves.
Speaking ahead of the Sibos financial services conference that will take place in Dubai later this month, Cleaves said there may be a “shake-out” of what banks offer in future.
“CRD IV could leave banks with a choice to make about which clients they serve, which markets they enter and the product mix they are able to offer,” he said. “Banks may choose not to provide certain products to certain clients in certain locations.”
He added that local regional banks “may not choose to expand beyond their current footprint”.
Although Cleaves did not single out any particular products as being particularly affected by CRD IV, he predicted that no product set would remain untouched. Banks would review capital return across their portfolio, he said. “The portfolio construction of a bank’s business model is much more important than it used to be. Banks have to work out the right balance across the piece.”
Although CRD IV is due to be implemented next year, Cleaves thought that changes in the banking environment would not be immediate.
CRD IV brings the Basel III agreement on capital adequacy into law within the EU. Its requirements include a countercyclical capital buffer and capital buffers for systemically important institutions.
Sally Percy is editor of The Treasurer