General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
December 07, 2017

The oversight body of BCBS, which constitutes the Group of Central Bank Governors and Heads of Supervision (GHOS), has endorsed the outstanding Basel III post-crisis regulatory reforms. BCBS published the final standards text detailing the reforms and the its assessment of their quantitative impact. A short description of the agreed reforms was also published in the form of a summary document. The revised standards will take effect from January 01, 2022 and will be phased-in over five years.

The GHOS has endorsed the BCBS proposal to extend the implementation date of the revised minimum capital requirements for market risk, which were originally set to be implemented in 2019, to January 01, 2022 (which will constitute both the implementation and regulatory reporting date for the revised framework). Deferring implementation of the revised market risk framework will align its start date with that of the recently announced Basel III revisions for credit risk and operational risk. It will allow additional time for banks to develop the systems infrastructure needed to apply the framework and for BCBS to address certain issues related to the market risk framework. This includes a review of the calibrations of the standardized and internal model approaches to ensure consistency with the original expectations of BCBS. The reforms endorsed by the GHOS include the following elements:

  • Revised standardized approach for credit risk, which will improve the robustness and risk- sensitivity of the existing approach.
  • Revisions to the internal ratings-based approach for credit risk, where the use of the most advanced internally modeled approaches for low-default portfolios will be limited.
  • Revisions to the credit valuation adjustment (CVA) framework, including the removal of the internally modeled approach and the introduction of a revised standardized approach.
  • Revised standardized approach for operational risk, which will replace the existing standardized approaches and the advanced measurement approaches.
  • Revisions to the measurement of the leverage ratio and a leverage ratio buffer for global systemically important banks (G-SIBs), which will take the form of a tier 1 capital buffer set at 50% of a G-SIB's risk-weighted capital buffer.
  • An aggregate output floor, which will ensure that banks' risk-weighted assets (RWAs) generated by internal models are no lower than 72.5% of RWAs, as calculated by the Basel III framework's standardized approaches. Banks will also be required to disclose their RWAs based on these standardized approaches.

GHOS members also reaffirmed their expectation of full, timely, and consistent implementation of all elements of this package, including the minimum capital requirements for market risk. The standards agreed by GHOS constitute minimum standards, although jurisdictions may elect to adopt more conservative standards. Moreover, jurisdictions will be considered compliant with the Basel framework if they do not implement any of the internally modeled approaches and instead implement the standardized approaches. The Basel Committee has established a program to evaluate the post-crisis reforms and will actively participate in the efforts of FSB to evaluate the effects of reforms. Stefan Ingves, Chairman of the Basel Committee and Governor of Sveriges Riksbank, said: "Now that the Basel III regulatory reform agenda is complete, we must focus on the important task of ensuring the standards are implemented consistently around the world. The Committee, through its Regulatory Consistency Assessment Program, will therefore continue to monitor closely the implementation of the Basel III standards."


Related Links


Effective Date: January 01, 2022

Keywords: International, Banking, Final Basel III, Output Floor, QIS, BCBS

Related Articles

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News

EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2

The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.

April 16, 2019 WebPage Regulatory News

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 16, 2019 WebPage Regulatory News

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News

PRA Seeks Input and Issues Specifications for Insurance Stress Tests

PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.

April 15, 2019 WebPage Regulatory News

PRA Finalizes Policy on Approach to Managing Climate Change Risks

PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).

April 15, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for April 2019

EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.

April 12, 2019 WebPage Regulatory News

EIOPA Statement on Application of Proportionality in SCR Supervision

EIOPA published a supervisory statement on the application of proportionality principle in the supervision of the Solvency Capital Requirement (SCR) calculated in accordance with the standard formula.

April 11, 2019 WebPage Regulatory News

FED Updates Form and Supplemental Instructions for FR Y-9C Reporting

FED updated the form and supplemental instructions for FR Y-9C reporting. FR Y-9C is used to collect data from domestic bank holding companies, savings and loan holding companies, U.S intermediate holding companies, and securities holding companies with total consolidated assets of USD 3 billion or more.

April 11, 2019 WebPage Regulatory News

OSFI Finalizes Guidelines on Liquidity Adequacy and NSFR Disclosures

OSFI published the final Liquidity Adequacy Requirements (LAR) guideline and the net stable funding ratio (NSFR) disclosure requirements guideline.

April 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2920