Banks breathe a little sigh of relief as Basel III is completed

Basel III – or IV, if you’re a banker – is finally complete, and if implemented harmoniously across countries, it could force banks to raise huge amounts of capital, but tweaks to the final proposals render them less harsh than many expected.

Stefan-Ingves-Basel-Committee-R-600
Stefan Ingves, chairman of the Basel Committee, on Thursday, when new
documentation was released


The Basel Committee’s oversight body – titled the group of central bank governors and heads of supervision – has agreed on an output floor for banks that use internal models to calculate credit risk.

It was perhaps the most contentious piece of the Basel III framework, and disagreements over what the output-floor level should be caused a year-long delay to its finalization.

The group agreed on a risk-weighted asset (RWA) floor of 72.5%

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