Outcome of the September 2011 Basel Committee meeting

The Basel Committee today agreed on a range of measures to finalise key elements of its policy agenda and to put in place a strong implementation assessment framework.

After a careful review of public comments received on the July 2011 consultative document, the Committee agreed to finalise the assessment methodology for global systemically important banks (G-SIBs). It agreed to retain the proposed calibration for the additional loss absorbency requirement, which will range from 1% to 2.5% Common Equity Tier 1 (CET1) depending on a bank's systemic importance, with an empty bucket of 3.5% CET1 as a means to discourage banks from becoming even more systemically important. The Committee is proposing some changes to certain indicators to improve the methodology for identifying G-SIBs, which will be subject to additional testing by March 2012 using updated bank data. It is conducting this work in close cooperation with the Financial Stability Board.

The Committee will issue the revised G-SIB rules text and a summary and evaluation of the public comments before the November 2011 meeting of the G20 Leaders. It will continue to improve the quality and transparency of the data underlying the assessment methodology in time for implementation by 1 January 2016.

The Committee discussed comments on its proposal to introduce capital requirements for banks' exposures to central counterparties (CCPs). These exposures arise in the context of centrally cleared derivative transactions and the Committee believes that appropriate capitalisation is an additional measure to address systemic interconnectedness. It agreed to a number of adjustments to the treatment of banks' exposures to a CCP default fund and will issue these changes for final consultation in the coming weeks. The objective is to promote greater use of CCPs while ensuring that banks are appropriately capitalised against the exposures they face.

The Committee also reviewed its work to finalise the liquidity standards over the observation period. While the observation period for the Liquidity Coverage Ratio (LCR) extends until mid-2013, the Committee agreed to accelerate its review to arrive at any adjustments in key areas well in advance of the mid-2013 deadline. This accelerated process should provide greater market certainty about the final technical details and calibration of the LCR. The remainder of the observation period could still be used to ensure that these and any other outstanding issues relating to the LCR are fully addressed. The Committee continues its work to evaluate the Net Stable Funding Ratio over the observation period. It continues to invite the industry to engage in a constructive dialogue based on facts and informed analysis.

Finally, the Committee put in place a rigorous framework to monitor and review its members' implementation of the Basel regulatory capital framework. This comprehensive and robust framework will be coordinated by the Committee's Standards Implementation Group and will rely on peer reviews. It entails a review of members' domestic adoption and implementation timelines for the Basel regulatory capital framework, which includes Basel II, II.5 (trading book exposures) and III. Based on this monitoring, the Committee will publish shortly the status of members' adoption of the capital framework and will update this report on a regular basis. It will also review the consistency of members' legislation or regulations with the international minimum standard to identify differences that could raise level playing field concerns. Moreover, the Committee agreed to review the measurement of risk-weighted assets in both the banking book and the trading book, to ensure that the outcomes of the new rules are consistent in practice across banks and jurisdictions.

Mr Stefan Ingves, Basel Committee Chairman and Governor of Sweden's central bank, said that "the Basel Committee is fully on track to finalise outstanding policy work according to agreed timelines. The implementation of Basel Committee standards is now one of our highest priorities. Basel III and the other measures taken by the Committee in response to the financial crisis will only succeed if there is complete and globally consistent implementation of these policies. The Committee's framework for monitoring implementation will provide strong incentives for member countries to fully implement the standards within the agreed timelines." 

In addition to the work on regulatory issues, Committee members exchanged information and views on recent developments in their banking systems.