BCBS published the results of its latest Basel III monitoring exercise, based on data as of June 30, 2019. To provide additional operational capacity for banks and supervisors to respond to the immediate financial stability priorities resulting from the impact of COVID-19, BCBS decided not to collect Basel III monitoring data for the end-June 2020 reporting date and, therefore, not to publish a report in Spring 2021. BCBS aims to publish the next Basel III monitoring report on end-December 2019 data in Autumn 2020. Additionally, CPMI and IOSCO released an update showing that 25 of the 28 jurisdictions participating in the implementation monitoring program have adopted measures implementing the international standards for all types of financial market infrastructures. The jurisdictions that have not yet fully adopted such measures are United States, Chile, and Argentina.
The report sets out the impact of the Basel III framework that was initially agreed in 2010 as well as the effects of the December 2017 finalization of the Basel III reforms. The report also reflects the finalization of the market risk framework published in January 2019. Given the June 2019 reporting date, the results do not reflect the economic impact of the COVID-19 on participating banks. Nevertheless, BCBS believes that the information contained in the report will provide relevant stakeholders with a useful benchmark for analysis. The Basel III monitoring exercise covers data from 174 banks, including Group 1 and Group 2 banks. The 105 "Group 1" banks are defined as internationally active banks that have Tier 1 capital of more than EUR 3 billion; this group include all 30 institutions that have been designated as global systemically important banks (G-SIBs). The 69 "Group 2" banks are banks that have Tier 1 capital of less than EUR 3 billion or are not internationally active. As recently agreed by the Group of Governors and Heads of Supervision, implementation of the final Basel III minimum requirements has been deferred to January 01, 2023 and they will be fully phased in by January 01, 2028.
The average impact of the fully phased-in final Basel III framework on the Tier 1 minimum required capital of Group 1 banks is lower (+2.5%) when compared with the 3.0% increase at the end of December 2018. The capital shortfalls at the end-June 2019 reporting date are EUR 16.6 billion for Group 1 banks at the target level with reduced estimation bias and EUR 20.3 billion with conservative estimation, in comparison with EUR 24.7 billion at end-December 2018. In terms of Basel III liquidity requirements, the weighted average liquidity coverage ratio (LCR) was 136% for the Group 1 bank sample and 177% for Group 2 banks. All banks in the sample reported an LCR that met or exceeded 100%. The weighted average net stable funding ratio (NSFR) remained stable at 116% for the Group 1 bank sample and at 120% for the Group 2 bank sample. As of June 2019, around 96% of the banks in the NSFR sample reported a ratio that met or exceeded 100%, while all banks reported an NSFR at or above 90%.
- Press Release on Basel III Monitoring Report
- Basel III Monitoring Report
- CPMI and IOSCO Press Release
- CPMI and IOSCO Update
Keywords: International, Banking, FMI, Basel III Monitoring, Basel III, QIS, Regulatory Capital, Liquidity Risk, LCR, NSFR, Market Risk, COVID-19, CPMI, IOSCO, BCBS
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