His prediction, based on ACF’s banking simulation software, Global Banker, predicted profits could fall by a third after the introduction of Basel III in 2013. “Several banks recently complained to regulators about the negative impact Basel III will have on their profits,” said Galitz. “We have been saying this since they were announced six months ago.”

 

Galitz says the third set of rules from the Basel Committee on Banking Supervision has tightened the definition of a bank’s Tier 1 capital – the amount a bank must hold as a safety measure for any future crashes. “Basel III may force banks to widen their margins and put up the cost of lending and if it’s going to cost banks, it’s going to cost us the consumers, too,” said Galitz. “But the good news is that banks will definitely be safer.”

 

The advanced training simulator Global Banker, designed by ACF Consultants, is being used by some of the world’s biggest banks to train staff to work within Basel III. The programme tested bankers with the new rules, which also include higher capital ratios and new liquidity requirements. “Working with simulated banks under the new system gives us a fascinating preview of what life in the banking world will be like over the next ten years,” said Galitz. He claims that its  training software gives the most realistic and accurate view of how bankers will operate once Basel III has commenced.