Basel III to increase cost of credit, Felaban president says

Monday, November 8, 2010

Basel III capital requirements will put enough pressure on banks to increase the cost of credit in Latin America, perhaps as soon as next year, Ricardo Marino, president of Latin American banking federation Felaban and a board member at Itau Unibanco (NYSE: ITUB), told BNamericas.

Marino said that while the new rules will generally not require Latin American banks to seek serious capital hikes, quality might be an issue, with Tier I capital needing a boost in some markets.

He added that the stiffer rules are likely to slow down credit portfolio growth, as well as increase the cost of bank lending. Because banks across the region are already setting aside new capital for the rules, Marino said, their effect could be evident as soon as next year.

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Marino made his comments on the sidelines of Felaban's annual conference, taking place this year in Uruguay.