On November 10th, the European Banking Authority (EBA) published its first draft implementing technical standards (ITS) on Pillar 3 disclosure of institutions’ exposures to interest rate risk on positions not held in the trading book (IRRBB). The final draft ITS put forward comparable disclosures that will help stakeholders assess institutions’ IRRBB risk management framework as well as the sensitivity of institutions’ economic value of equity and net interest income to changes in interest rates. The standards will amend the comprehensive ITS on institutions’ public disclosures, in line with the strategic objective of developing a single and comprehensive Pillar 3 package that should facilitate implementation by institutions and further promote market discipline. Continue reading…

The Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO) (the standard setters) recently invited comments on their joint consultative report Review of margining practices. The report – which is part of the Financial Stability Board’s work programme to enhance the resilience of the non-bank financial intermediation sector – looks at margin calls in March and April 2020, margin practice transparency, predictability and volatility across various jurisdictions and markets, as well as market participants’ liquidity management preparedness. Continue reading…

On September 29, the Basel Committee published the results of its latest Basel III monitoring exercise, based on 31 December 2020 data. The report sets out the impact of the Basel III framework including the December 2017 finalisation of the Basel III reforms and the January 2019 finalisation of the market risk framework. It includes a special feature on exemptions from the leverage ratio exposure measure due to Covid-19, and covers both Group 1 and 2 banks (see note to editors for definitions). 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 +2.9%, compared to a 1.8% increase at end-December 2019. This higher impact for Group 1 banks and G-SIBs may be partially driven by the different treatment of some outlier banks. Continue reading…

Throughout 2021, the Basel Committee has written newsletters about improving banks’ resilience to cyber threats, climate-related financial risk, how to develop global sustainability standards, and the impact of financial digitization on the banking system. The amount of external cyber threats and incidents, such as ransomware attacks, have made banks concerned, and poses major risks to their financial systems and the safety of individual banks. Continue reading…

Carolyn Rogers, Secretary General of the Basel Committee on Banking Supervision, recently delivered a keynote speech at the The Kangaroo Group virtual debate on 8 September 2021. When she received the invitation, the name of the group caught her attention: she had to admit to needing to do a bit of research to find out what possible interest a group interested in kangaroos would have in bank regulation. But she was pleased to discover that the organisation has a lot in common with the Basel Committee. Continue reading…

The Basel Committee on Banking Supervision has recently published its work programme for 2021-22. The work programme sets out the strategic priorities for the Committee over the coming year and reflects the outcome of a recent strategic review by the Committee to ensure that it continues to effectively promote global financial stability and strengthen the regulation, supervision and risk management practices of banks worldwide.   Continue reading…

The European Banking Authority (EBA) recently published its annual report on Asset Encumbrance. As COVID-19 spread across Europe and activity in primary markets froze, banks made extensive use of central bank liquidity facilities to build precautionary liquidity buffers. In this context, after decreasing by 80bp in 2019 to 25%, in the first half of 2020, the asset encumbrance ratio went up to 27.5%. In the first half of 2020, the volume of total assets and collateral received rose by almost 10% while encumbered assets and collateral increased by more than 20%. Continue reading…

by Lieve Lowet

We live in exceptional times. Right now it is good to check whether the measures announced at high speed comply with the basic principles of correct decision-making and that they are in accordance with the applicable laws and regulations. I have made an in-depth analysis and would like to share my findings in a series of three articles. The articles will be published on three consecutive days. On 17 January 2020, in tempore non suspectu, the ECB issued a recommendation on dividend distribution policies to prepare banks for the introduction of IFRS9 and the new CRD / CRR requirements (ECB / 2020/1, OJ C30 29 January 2020). Banks, even those with “fully loaded” ratios, were recommended to distribute their net profits in dividends in a conservative manner. And then the corona crisis started to hit….
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Prior to the outbreak of the COVID-19 virus, large active banks operating on an international scale made more progress towards satisfying the Basel III capital requirements. Their liquidity ratios remained stable in comparison to the ratios reported in the end of 2018, but there is a need to increase the operational capacity of banks and supervisors to adequately respond to the pandemic. The Basel Committee has made a decision to not collect Basel III monitoring data for the end June 2020 reporting date set. Continue reading…

The Basel Committee’s oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), has endorsed a set of measures to provide additional operational capacity for banks and supervisors to respond to the immediate financial stability priorities resulting from the impact of the coronavirus disease (Covid-19) on the global banking system. “It is important that banks and supervisors are able to commit their full resources to respond to the impact of Covid-19. This includes providing critical services to the real economy and ensuring that the banking system remains financially and operationally resilient. The measures endorsed by GHOS today aim to prioritise these objectives and we remain ready to act further if necessary,” said François Villeroy de Galhau, Chairman of the GHOS and Governor of the Bank of France. 
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