Basel III monitoring results based on end-December 2019 data published by the Basel Committee

  • Prior to Covid-19, large internationally active banks made further progress towards meeting fully phased-in final Basel III capital requirements
  • Their liquidity ratios improved compared with end-June 2019
  • Basel III monitoring dashboard gradually introduces an interactive visualisation of the results

Today the Basel Committee published the results of its latest Basel III monitoring exercise[1], based on data as of 31 December 2019. The report sets out the impact of the Basel III framework that was initially agreed in 2010 as well as the effects of the Committee’s December 2017 finalisation of the Basel III reforms[2] and the finalisation of the market risk framework[3] published in January 2019. Given the December 2019 reporting date, the results do not reflect the economic impact of Covid-19 on participating banks. Nevertheless, the Committee believes that the information contained in the report will provide relevant stakeholders with a useful benchmark for analysis.

Data are provided for 173 banks, including 105 large internationally active banks. These “Group 1” banks are defined as internationally active banks that have Tier 1 capital of more than €3 billion, and include all 30 institutions that have been designated as global systemically important banks (G-SIBs). The Basel Committee’s sample also includes 68 “Group 2” banks (ie banks that have Tier 1 capital of less than €3 billion or are not internationally active).

The final Basel III minimum requirements will be implemented by 1 January 2023 and fully phased in by 1 January 2028. The average impact of the fully phased-in final Basel III framework on the Tier 1 minimum required capital (MRC) of Group 1 banks is lower (+1.8%) when compared with the 2.5% increase at end-June 2019 (see the “reduced estimation bias” part of the table below). For this calculation, for three G-SIBs that are outliers due to overly conservative assumptions under the revised market risk framework, zero change from the revised market risk framework has been assumed for the calculation of 31 December 2019 results. If these three banks are included with their conservative market risk numbers (see the “conservative estimation” part of the table), there is a 2.1% increase.

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