Basel rate-risk project sets up scrap over deposit models

Attempts to set international capital rules for banking book interest rate exposures are hitting sensitive ground as banks warn lending will suffer if regulators cap deposit maturities

BIS headquarters, home of the Basel Committee

It is arguably the central question in banking – how long depositors will leave their money with an institution. To date, banks have been allowed to answer the question themselves, but the industry is increasingly worried regulators will impose an answer as they try to agree capital rules for interest rate risk in the banking book (IRRBB).

If the maturity that banks can assume is capped – which five industry sources say is one of the options being considered – the fear is that institutions would