May 16, 2012, 19:10 CET
Basel III
Basel III implementation monitoring
The Basel Committee on Banking Supervision is monitoring the impact of “Basel III: A global regulatory framework for more resilient banks and banking systems” and “Basel III: International framework for liquidity risk measurement, standards and monitoring”. The monitoring exercise is conducted semi-annually with end of December and end June as reporting dates.
The Deutsche Bundesbank is making publicly available the Basel III monitoring workbook and accompanying instructions.
The workbook available for download is for information purposes only; participating institutions receive their workbooks directly from Deutsche Bundesbank.
The impact of the international capital reforms and of the new liquidity standards (Basel III) has been monitored and analysed since the beginning of 2011 on a semi-annual basis by the Basel Committee on Banking Supervision for its member countries and by the EBA for the European Economic Area (Basel III monitoring). Across Europe, 158 banks from 20 EU member states have taken part in the excerise, including 34 German institutions.
The analyses are carried out based on the assumption of full implementation of Basel III as of 30 June 2011, i.e. transitional arrangements, such as the phase-in of deductions up to 2018 and grandfathering arrangements until 2021, are not taken into account. Furthermore, measures to increase capital that were taken in response to the EBA’s capital exercise have not yet been included in the present report due to the 30 June 2011 reporting date.
The common equity Tier 1 capital ratio according to the Basel III definition amounts, on average, to 5.0% for Group 1 banks and 9.0% for Group 2 banks. In Germany, “Group 1” includes nine internationally active institutions with a core tier 1 capital of at least €3 billion according to the current definition. The other 25, smaller banks are assigned to “Group 2”.
Under the assumptions mentioned above, Group 1 banks would have required additional capital, in the amount of €48.9 billion to meet the target ratio of 7.0% for common equity Tier 1 capital plus an add-on of 1.0% to 2.5% for global systemically important banks already at the reporting date of 30 June 2011 (Group 2 institutions: €1.6 billion). More than 25 % of this capital shortfall will already be covered by 30 June 2012 according to the capital plans wihch have been approved by the European Banking Authority (EBA) in response to the autumn 2011 EBA recapitalisation exercise. The overall nine-year transition period until full implementation of the new capital framework is designed to give the institutions sufficient time to cover the remaining capital shortfall. This process will be monitored closely by supervisory authorities.Actions to improve capital include, for example, retention of earnings, capital raisings, hardening of other Tier 1 capital components, and the disclosure of hidden reserves.
The report on the Basel III monitoring for German institutions can be downloaded here (in german only).
