Download Basel iii News, from the Basel iii Compliance Professionals Association PDF

TitleBasel iii News, from the Basel iii Compliance Professionals Association
File Size17.1 MB
Total Pages252
Document Text Contents
Page 1

P a g e | 1

Basel iii Compliance Professionals Association (BiiiCPA)

Basel iii Compliance Professionals Association (BiiiCPA)
1200 G Street NW Suite 800 Washington, DC 20005-6705 USA

Tel: 202-449-9750 Web:

Dear Member,

We have all the details of the Basel Committee’s
Monitoring Report (March 2016) and the highlights of
the Basel III monitoring exercise as of 30 June 2015.

All large internationally active banks meet Basel III
minimum and CET1 target capital requirements.

To assess the impact of the Basel III framework on banks, the Basel
Committee on Banking Supervision monitors the effects and dynamics of
the reforms.

For this purpose, a semiannual monitoring framework has been set up on
the risk-based capital ratio, the leverage ratio and the liquidity metrics
using data collected by national supervisors on a representative sample of
institutions in each country.

This report is the ninth publication of results from the Basel III monitoring
exercise and summarises the aggregate results using data as of 30 June

The Committee believes that the information contained in the report will
provide relevant stakeholders with a useful benchmark for analysis.

Information considered for this report was obtained by voluntary and
confidential data submissions from individual banks and their national

Page 2

P a g e | 2

Basel iii Compliance Professionals Association (BiiiCPA)

Data was provided for a total of 230 banks, including 101 large
internationally active (“Group 1”) banks and 129 other (“Group 2”) banks.

Members’ coverage of their banking sector is very high for Group 1 banks,
reaching 100% coverage for some countries, while coverage is lower for
Group 2 banks and varies by country.

In general, this report does not take into account any transitional
arrangements such as phase- in of deductions and grandfathering

Rather, the estimates presented generally assume full implementation of
the final Basel III requirements based on data as of 30 June 2015.

No assumptions have been made about banks’ profitability or behavioural
responses, such as changes in bank capital or balance sheet composition,
either since this date or in the future.

For this reason, the results are not comparable with current industry
estimates, which tend to be based on forecasts and consider management
actions to mitigate the impact, and they also incorporate estimates where
information is not publicly available.

Furthermore, the report does not reflect any additional capital
requirements under Pillar 2 of the Basel II framework, any higher loss
absorbency requirements for domestic systemically important banks, nor
does it reflect any countercyclical capital buffer requirements.

Risk-based capital requirements

In the analysis of the risk-based capital requirements, this report focuses on
the following items, assuming that the positions as of 30 June 2015 were
subject to the fully phased-in Basel III standards:

• Changes to bank capital ratios under the Basel III requirements, and
estimates of any capital deficiencies relative to fully phased-in minimum
and target capital requirements (including capital surcharges for global
systemically important banks – G-SIBs);

• Changes to the definition of capital that result from the full phasing-in of
the Basel III capital standard, referred to as common equity Tier 1 (CET1),
including a reallocation of deductions to CET1, and changes to the eligibility
criteria for additional Tier 1 and Tier 2 capital; and

Page 127

P a g e | 127

Basel iii Compliance Professionals Association (BiiiCPA)

Policy implications

What does all of this mean for policy? While the water has not become as
warm as two years ago I thought it would, I do not yet see enough evidence
that we have missed some shift to a permanently colder environment.

My central expectation remains that as the effects of the crisis continue to
heal and as the deflationary effects of past sterling strength and oil price
falls wane, domestic cost pressures will gradually push inflation back to

I will be looking to see that consumer confidence remains robust and
business intentions remain strong.

I will be watching to see if pay growth picks up as disinflationary pressures
fade and if productivity growth accelerates as a result of the pick-up in
investment and of the tightness of the labour market.

And I will be looking very carefully at the risks of another unfortunate event
for the UK economy from a hard landing elsewhere in the world. If
economic growth falters and pay and productivity remain stuck at current
levels then the healing story will become increasingly less convincing.

There are of course other possible stories one can tell about the economy
and other risks. I want to mention three.

The first is the possibility, much in the news two years ago, that monetary
policy will not react in time to the build-up of inflationary pressure.

Monetary policy typically has its peak impact on inflation somewhere
between 18 and 24 months ahead.

The risk here is that when the current external disinflationary pressures
subside, domestic cost growth pressures will have built up and will push
inflation above target before monetary policy can restrain it.

I would not discount this risk. The labour market has clearly become much

And if pay is being held down by cyclical or scarring effects, these could
change quickly. And there has been a substantial depreciation in sterling in
the past three months which will push up on inflation, possibly more

Page 251

Similer Documents