BCBS announcements on G-SIBs, capital requirements for CCPs exposures and Basel III | Practical Law

BCBS announcements on G-SIBs, capital requirements for CCPs exposures and Basel III | Practical Law

The Basel Committee on Banking Supervision (BCBS) has published a press release, announcing the outcome of its September 2011 meeting, which considered additional requirements for global systemically important banks, capital requirements for exposures to central counterparties and the observation period for the Basel III liquidity requirements. (Free access.)

BCBS announcements on G-SIBs, capital requirements for CCPs exposures and Basel III

Practical Law UK Legal Update 0-508-6102 (Approx. 3 pages)

BCBS announcements on G-SIBs, capital requirements for CCPs exposures and Basel III

by PLC Financial Services
Published on 29 Sep 2011 • International
The Basel Committee on Banking Supervision (BCBS) has published a press release, announcing the outcome of its September 2011 meeting, which considered additional requirements for global systemically important banks, capital requirements for exposures to central counterparties and the observation period for the Basel III liquidity requirements. (Free access.)
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On 28 September 2011, the Basel Committee on Banking Supervision (BCBS) published a press release, announcing the outcome of its September 2011 meeting.
The press release states that the BCBS reached agreement on the following:
  • Additional loss absorbency requirements for globally systemically important banks (G-SIBs) and the methodology for assessing banks' systemic importance.
  • Its proposals on the capitalisation of bank exposures to central counterparties.
  • The Liquidity Coverage Ratio (LCR) observation period.
  • Members' implementation of the Basel III reforms.
For more information about the BCBS' ongoing work, see Practice note, Basel Committee on Banking Supervision: ongoing initiatives.
On 28 September 2011, the Basel Committee on Banking Supervision (BCBS) published a press release, announcing the outcome of its September 2011 meeting.
The press release states that the BCBS reached agreement on the following:
  • Global systemically important banks (G-SIBs). The BCBS considered responses received to its July 2011 consultation on additional requirements for G-SIBs (see Legal update, FSB and BCBS consult on measures to address the risks posed by systemically important financial institutions). It has decided to proceed with the proposed calibration for the additional loss absorbency requirement. This will range from 1% to 2.4% common equity Tier 1 (CET1), depending on a bank's systemic importance, with an additional 1% CET1 "bucket" to discourage banks from becoming more systemically important. The BCBS intends to make changes to its methodology for identifying G-SIBs, which will be subject to additional testing by March 2012 using updated bank data.
    The BCBS will issue the revised rules text, with feedback on the responses received, before the November 2011 G20 meeting. The implementation date for these requirements remains 1 January 2016.
  • Exposure to central counterparties (CCPs). The BCBS has agreed on a number of adjustments to its proposals for the treatment of banks' exposures to a CCP default fund. It will issue these changes for consultation "in the coming weeks". The BCBS published a consultation on the capitalisation of bank exposures to central counterparties in December 2010 and it announced in June 2011 that it intended to finalise its proposals by the end of 2011 (see Legal update, BCBS revises Basel III text on the capital treatment for bilateral counterparty credit risk).
  • Basel III liquidity requirements. The BCBS agreed to accelerate its review of the Liquidity Coverage Ratio (LCR) during the LCR observation period so that it arrives at any adjustments in key areas "in advance of the mid-2013 deadline". It intends to use the remainder of the LCR observation period to ensure that these issues are fully addressed.
  • Basel III implementation. The BCBS will:
    • publish "shortly" the status of members' adoption of the Basel II and Basel III framework (including the "Basel 2.5" measures agreed in July 2009). It will update this report on a regular basis;
    • review the consistency of members' implementation measures with the international minimum standard to identify issues that could raise level playing field concerns; and
    • review the measurement of risk-weighted assets in the banking book and the trading book to ensure that the rules are consistent across banks and jurisdictions.
For more information about the BCBS' ongoing work, see Practice note, Basel Committee on Banking Supervision: ongoing initiatives. For more information about the Basel III reforms, see Practice note, Basel III: an overview.
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