Basel IV: Quantitative Impact Study on Cyprus Banks

Our analysis indicates that Cyprus Banks are expected to have a reduction in capital requirements as a consequence of the revised risk-weights assigned to specialised lending and the introduction of a risk-sensitive Loan-to-Value (LtV) based approach for real estate exposures.

Even though the overall credit risk framework under Basel IV is generally in line with Basel III, it includes a number of enhancements for specific credit portfolios that will impact certain business and products.

Fully understanding the changes and their impact is, therefore, crucial to adequately re-defining Banks’ capital plan, and consequently their business strategy.

Without this understanding, inappropriate allocation of capital requirements may occur, resulting in a skew in lending, potential mispricing of products and increased cost to customers.

Download the report for an analysis of the impact of Basel IV on the Banking-book credit risk requirements, as well as guidance on how to strengthen the bank management’s decisions around the matter.