On 2 October 2019, the Basel Committee on Banking Supervision (BCBS) published a report presenting the results of its latest Basel III monitoring exercise, based on data as of 31 December 2018. The report sets out the impact of the Basel III framework that was initially agreed in 2010 as well as the effects of BCBS’ finalisation of the Basel III reforms made in December 2017. For the first time, it also reflects the finalisation of the market risk framework published in January 2019.

In summary the report found that:

  • changes in minimum required capital from fully phased-in final Basel III standards remain stable for large internationally active banks compared with end-2017, including the recently recalibrated market risk standards;
  • applying the 2022 minimum requirements for Total Loss-Absorbing Capacity (TLAC), 2 of the global systemically important banks in the sample have a combined shortfall of €32.6 billion, compared with €68 billion at the end of June 2018. Considering the fully phased-in final Basel III framework, six banks report a shortfall of €78 billion which is a decrease from €108.8 billion at the end of June 2018;
  • liquidity ratios remain stable compared with end-June 2018; and
  • capital ratios have remained relatively constant in Europe whereas the Americas and the rest of the world saw increases.

In addition to the report, BCBS published a press release summarising the results of the monitoring exercise. The final Basel III minimum requirements are expected to be implemented by 1 January 2022 and fully phased in by 1 January 2027.