Basel III capital and liquidity ratios remained stable in the second half of 2023, latest Basel III monitoring exercise shows
- Basel III capital and liquidity ratios remained stable in the second half of 2023.
- Banks' current capital ratios increased slightly, and their fully phased-in Basel III capital ratios decreased slightly.
- At large internationally active banks the dividend payout ratio remained stable.
Basel III capital and liquidity ratios remained stable in the second half of 2023, according to the latest Basel III monitoring exercice, published today. Current capital ratios increased slightly, and capital ratios on a fully phased-in Basel III basis decreased slightly. In the same period, the dividend payout ratio for large internationally active banks remained stable.
The report, based on data as of 31 December 2023, sets out trends in current bank capital and liquidity ratios and the impact of the fully phased-in Basel III framework. This includes the December 2017 finalisation of the Basel III reforms and the January 2019 finalisation of the market risk framework. It covers both large internationally active banks (Group 1) and other smaller banks (Group 2). See the note to editors for definitions.
The implementation of the final elements of the Basel III minimum requirements began on 1 January 2023. In the second half of 2023, the average impact of the fully phased-in final Basel III framework on the Tier 1 minimum required capital (MRC) on Group 1 banks was +1.3%, compared with +2.4% at end-June 2023. Group 1 banks report no total regulatory capital shortfalls, compared with a shortfall of €3.3 billion at end-June 2023.
The monitoring exercise also collected bank data on Basel III liquidity requirements. The weighted average Liquidity Coverage Ratio (LCR), at 138% for Group 1 banks, is stable compared with the previous reporting period. Three Group 1 banks reported an LCR below the minimum requirement of 100%.
The weighted average Net Stable Funding Ratio (NSFR) decreased to 123% for Group 1 banks. All banks reported an NSFR above the minimum requirement of 100%.
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Overview of results |
Table 1 |
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30 June 20231 |
31 December 2023 |
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Group 1 |
Of which: |
Group 1 |
Of which: |
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Current Basel III framework |
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|
CET1 ratio (%) |
12.9 |
12.7 |
13.1 |
13.0 |
|
|
Target capital shortfalls (€ bn)2 |
0.0 |
0.0 |
0.0 |
0.0 |
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|
TLAC shortfall 2022 minimum (€ bn) |
13.9 |
13.9 |
26.0 |
26.0 |
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|
Total accounting assets (€ bn) |
83,639 |
58,812 |
90,400 |
59,838 |
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Leverage ratio (%)3 |
6.0 |
6.1 |
6.1 |
6.0 |
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|
LCR (%) |
138.5 |
137.0 |
138.4 |
136.1 |
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|
NSFR (%) |
123.9 |
123.9 |
122.6 |
123.1 |
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Fully phased-in final Basel III framework (2028) |
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Change in Tier 1 MRC at the target level (%) |
2.4 |
2.4 |
1.3 |
0.2 |
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CET1 ratio (%) |
13.7 |
13.9 |
13.5 |
13.6 |
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Target capital shortfalls (€ bn); of which: |
3.3 |
3.3 |
0.0 |
0.0 |
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CET1 |
0.0 |
0.0 |
0.0 |
0.0 |
|
|
Additional Tier 1 |
0.0 |
0.0 |
0.0 |
0.0 |
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|
Tier 2 |
3.3 |
3.3 |
0.0 |
0.0 |
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TLAC shortfall 2022 minimum (€ bn) |
13.9 |
13.9 |
30.1 |
30.1 |
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Leverage ratio (%)3 |
6.1 |
6.1 |
6.1 |
6.0 |
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CET1 = Common Equity Tier 1; LCR = Liquidity Coverage Ratio; MRC = minimum required capital; NSFR = Net Stable Funding Ratio; TLAC = total loss-absorbing capacity. 1 The values for the previous period may differ slightly from those published in the previous report. This is caused by data resubmissions for previous periods to improve the underlying data quality and enlarge the time series sample as well as by a change in methodology, which is explained in Section 2.2. 2 These use the 2017 definition of the leverage ratio exposure measure. 3 The leverage ratios reflect temporary exclusions from leverage exposures introduced in some jurisdictions. Source: Basel Committee on Banking Supervision. |
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The report is accompanied by interactive Tableau dashboards that allow users to explore the results with greater ease and flexibility.
Note to editors
Through a rigorous reporting process, the Basel Committee regularly reviews the implications of the Basel III standards for banks and has been publishing the results of such exercises since 2012.
The results shown for "current Basel III framework" reflect the current jurisdictional standards that apply to the reporting banks as of 31 December 2023. They reflect different degrees of implementation of the Basel III reforms. The Basel III implementation dashboard provides an overview of the Basel III implementation status across jurisdictions. The results shown for "fully phased-in final Basel III framework (2028)" assume that the positions as of 31 December 2023 were subject to the full application of the Basel III standards. That is, they do not account for transitional arrangements set out in the Basel III framework, which expire on 1 January 2028. No assumptions were made about bank profitability or behavioural responses, such as changes in bank capital or balance sheet composition. For that reason, the results of the study may not be comparable with industry estimates.
Data are provided for 180 banks, including 118 large internationally active banks. These "Group 1" banks are defined as internationally active banks that have Tier 1 capital of more than €3 billion and include 29 institutions that have been designated as global systemically important banks (G-SIBs). The Basel Committee's sample also includes 62 "Group 2" banks (ie banks that have Tier 1 capital of less than €3 billion or are not internationally active).
The values for the previous period may differ slightly from those published in the previous report. This is caused by resubmissions of data for previous periods to improve the underlying data quality and enlarge the time series sample as well as by a change in methodology, as explained in the report.