Featured Product

    BCBS Publishes Results of the Basel III Monitoring Exercise

    March 20, 2019

    BCBS published results of the Basel III monitoring exercise based on data as of June 30, 2018. 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 by BCBS. However, it does not yet take into account the finalized the market risk framework, which was published in January 2019.

    The report covers data for 189 banks, including 106 large internationally active banks, or Group 1, banks and 83 Group 2 banks. The Group 1 banks are defined as internationally active banks that have tier 1 capital of more than EUR 3 billion and include all 29 institutions that have been designated as global systemically important banks (G-SIBs). Group 2 banks are banks that have tier 1 capital of less than EUR 3 billion or are not internationally active. On a fully phased-in basis, the capital shortfalls at the end of June 2018 reporting date are EUR 30.1 billion for Group 1 banks at the target level. These shortfalls are more than 70% smaller than in the end of 2015 cumulative quantitative impact study (QIS) exercise, driven mainly by higher levels of eligible capital. For Group 1 banks, the tier 1 minimum required capital would increase by 5.3%, following full phasing-in of the final Basel III standards relative to the initial Basel III standards. This compares with an increase of 3.2% at the end of 2017.

    The final Basel III minimum requirements are expected to be implemented by January 01, 2022 and fully phased in by January 01, 2027. The report provides data on the initial Basel III minimum capital requirements, total loss-absorbing capacity (TLAC), and Basel III liquidity requirements:

    • The initial Basel III minimum capital requirements were fully phased in by January 01, 2019 (while certain capital instruments can still be recognized for regulatory capital purposes until the end of 2021).
    • All banks in the sample continue to meet both the Basel III risk-based capital minimum common equity tier 1 (CET1) requirement of 4.5% and the target level CET1 requirement of 7.0% (plus any surcharges for G-SIBs, as applicable).
    • Applying the 2022 minimum requirements for total loss-absorbing capacity (TLAC), six out of 24 G-SIBs reporting TLAC data have a combined incremental TLAC shortfall of EUR 68 billion, at the end of June 2018, compared with EUR 82 billion at the end of December 2017.
    • The Basel III Liquidity Coverage Ratio (LCR) was set at 60% in 2015, increased to 90% in 2018, and continued to rise in equal annual steps to reach 100% in 2019. The weighted average LCR for the Group 1 bank sample was 135% on June 30, 2018, compared with 133% six months earlier. For Group 2 banks, the weighted average LCR remained almost stable at 180%. All banks in the sample reported an LCR that met or exceeded the final 100% minimum requirement.
    • The weighted average Net Stable Funding Ratio (NSFR) for the Group 1 bank sample remained stable at 116%, while for Group 2 banks the average NSFR increased slightly to 119%. As of June 2018, 96% of the Group 1 banks and 95% of the Group 2 banks in the NSFR sample reported a ratio that met or exceeded 100%, while all banks reported an NSFR at or above 90%.

     

    Related Links

    Keywords: International, Banking, Basel III Monitoring, QIS, Regulatory Capital, TLAC, NSFR, Liquidity Risk, LCR, BCBS

    Featured Experts
    Related Articles
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR

    The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy

    The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8201