As the transition period is agreed to last from 2013 to 2018, the new measures will become fully effective only on 1 January 2019. These eight years from now should provide the banking sector ample time to adjust to the new regulatory requirements by earnings retention and improved efficiency.
Also, we can reasonably expect a gradual decline in investors’ profit expectations as they realise and price in the improved stability of individual institutions and the financial system as a whole. Taking into account the expected improvements in profitability of the banking sector, it is likely that banks will be able to cope with the new requirements without major distress.