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Local+banks+face+%E2%80%9CBasel+III-compliant+Tier+2%E2%80%9D+challenges
Monday, 08 January 2018 - 16:43
Local banks face “Basel III-compliant Tier 2” challenges
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The international rating agency, Fitch Ratings says Sri Lankan banks are likely to significantly boost issuance of Basel III-compliant Tier 2 instruments in 2018.
 
It added that most banks will need to raise capital to meet higher Basel III requirements that take full effect in January 2019 and to support balance-sheet expansion.
 
“Banks will also need to undertake significant Basel III Tier 2 issuance, as a result of the phasing out of legacy instruments - and ongoing redemptions”, the agency said in a statement.
 
Around Rs.119 billion in qualifying legacy Basel II Tier 2 instruments that are subject to a 20% discount per year were outstanding at end-3Q17.
 
Fitch has rated Basel III instruments of four Sri Lankan banks since the framework was introduced in July 2017 - Sampath Bank, Seylan Bank, Nations Trust Bank and Bank of Ceylon.
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