Basel III Could Hurt Infrastructure Lending

The tougher capital requirements for banks adopted by the Basel Committee on Banking Supervision could have a negative impact on financial institutions’ ability to provide loans to governments and developers involved in infrastructure improvements, reports Reuters.

The tougher capital requirements for banks adopted by the Basel Committee on Banking Supervision could have a negative impact on financial institutions’ ability to provide loans to governments and developers involved in infrastructure improvements. Andrew Davison, a senior v.p. at Moody’s Investors Service, says, “If long-term lending requires more capital to back it, it affects the enthusiasm of banks to provide it.” Observers predict that the volume of project finance loans will drop sharply over the next few years as a result of Basel III rules.

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