The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions. The report sets out the jurisdictional adoption status of the Basel III standards as of the end of September 2021. This includes the Basel III post-crisis reforms published by BCBS in December 2017 and the finalized minimum capital requirements for market risk published in January 2019. Since the previous report in July 2020, member jurisdictions have made further progress in implementing standards, especially those whose deadlines have passed, despite the disruptions resulting from COVID-19 pandemic and the required shift in regulatory and supervisory priorities.
The report highlights that all jurisdictions now have final rules in force for the countercyclical capital buffer (CCyB). In respect of the outstanding capital standards, there have been eleven new adoptions. This includes three additional jurisdictions (Australia, Mexico, and US) that have adopted the final rules with regard to total loss-absorbing capacity (TLAC); two additional jurisdictions (Russia and South Africa) that have adopted final rules for standardized approach for measuring counterparty credit risk exposure (SA-CCR) and capital requirements for equity investments in funds; and four additional jurisdictions (Switzerland, Japan, Mexico, and US) that have adopted the net stable funding ratio (NSFR) standard. There have been seven additions across the disclosure parts of the framework too, in addition to the new adopters of the revised operational risk framework and the revised standardized approach for credit risk. The report excludes standards that have been already implemented by all jurisdictions, such as the liquidity coverage ratio (LCR) and the capital conservation buffers.
Further evaluation of the consistency of jurisdictional implementation is addressed through the Regulatory Consistency Assessment Program (RCAP) assessments. The outstanding RCAP on the net stable funding ratio and large exposures framework are expected to resume soon, as they were suspended last year in response to the COVID-19 pandemic. The report is complemented by a newly developed dashboard to reflect the full history of Basel III implementation and provide an overview of the progress up to date. The dashboard will be updated regularly and is intended to replace the existing report publications.
Keywords: International, Banking, Basel, Progress Report, CCyB, Large Exposures, Credit Risk, Market Risk, Operational Risk, Regulatory Capital, NSFR, SA-CCR, RCAP, COVID-19, BCBS
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleACPR Implements Updates Related to DPM Version 3.1
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.
The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.
The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.
Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.
EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.
The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.