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The impact of Basel III on the fair pricing of bank guarantee facilities

  • This study analyses the impact of Basel III on the fair pricing of bank guarantee facilities.Guarantees are an important risk mitigation instrument between exporters and importers in international trade and regularly a prerequisite for cross border sales contracts to be closed. Basel III – which shall be introduced from 2013 onwards - is a new regulation stipulating higher capital requirements for banks compared to the predecessor Basel II. It will therefore have an impact on the pricing of guarantee facilities which banks provide to exporting companies, making it also a crucial regulation for the cost of exportation overall. The study compares those contents of Basel III and Basel II which are particularly relevant for guarantees in order to identify and crystallize pricing-relevant changes in the regulations and their respective impact potential. The Basel frameworks are analyzed part by part and reviewed in terms of relevance for guarantees. In case of ambiguity the analysis is verified by complementary expert interviews. References and examples are mainly focusing on the German banking system but the basic conclusions can be generalized for those countries adopting Basel III.1 As the result, a case study expresses the quantitative outcomes of different scenarios and the impact of the different price determining factors on the overall fair pricing of bank guarantee facilities.

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Author of HS ReutlingenBeyer, Hans-Martin
Series (Serial Number):Reutlinger Diskussionsbeiträge zu Finanz- und Rechnungswesen (2012-2)
Publisher:Universitätsbibliothek Tübingen
Place of publication:Tübingen
Document Type:Book
Publication year:2012
Tag:bank guarantee
Page Number:32
PPN:Im Katalog der Hochschule Reutlingen ansehen
DDC classes:330 Wirtschaft
Open access?:Ja
Licence (German):License Logo  Open Access