Basel IV
In December 2017, the Basel Committee on Banking Supervision (BCBS) adopted a package of reforms to the regulatory framework for banks. While the Committee's oversight body merely refers to this as the finalization or completion of the Basel III regulatory reform agenda, the new package, because of the comprehensive changes it entails, is often also spoken of as “Basel IV”.
The new regulations will affect all banks, irrespective of their size and business model, since the regime not only restricts the application of the banks’ internal models for calculating minimum capital requirements, but also includes a revision of standard approaches. The deadline for starting implementation of the reform package is 1 January 2022; the transposition is to be accomplished over a period of five years, with full compliance with all the regulations being mandatory as of 1 January 2027.
Altogether, Basel IV will for the most part lead to increased capital requirements. The European Banking Authority (EBA) expects that the minimum Tier 1 capital requirement of EU banks will be 12.9% higher at the full implementation date.
At the next event in our “early bird” series, we would like to give you an overview of the key points in the Basel IV reform package.