Banks are already seeking to manage RoE in the new environment by balance-sheet restructuring and business model adjustments. The study suggests that the balance sheet restructuring and business-model adjustments could potentially mitigate up to 40 percent of Basel III’s RoE impact, on an average. I would like to give you a sense of likely impact on the lending rates of banks.
The growth prospects of the private-sector bond market are enhanced by the efficiency of the secondary market and the opening of new regulated wholesale and retail markets for private-sector securities. A further contribution to the development of this segment will come as banks increasingly securitize their loans. The money market is highly efficient.