Basel III: Implementation in EU

Abhishek Garg
Abhishek Tibrewala
Akshay Jand
Amit Choudhary
2
Agenda
Introduction
Challenges in Implementation
Conclusion
Implementation in EU
3
Agenda
Introduction
Challenges in Implementation
Conclusion
Implementation in EU
Introduction
Basel III is a global, voluntary regulatory standard on bank capital
adequacy, stress testing and market liquidity risk

Basel III is supposed to strengthen bank capital requirements by
increasing bank liquidity and decreasing bank leverage

Basel III is primarily related to the risks for the banks of a run on
the bank by requiring differing levels of reserves for different
forms of bank deposits and other borrowings

The focus of Basel III is to foster greater resilience at the individual
bank level in order to reduce the risk of system wide shocks.
Three Pillars of Basel III
Pillar 1 : Minimum Regulatory Capital Requirements based on Risk
Weighted Assets (RWAs) : Maintaining capital calculated through
credit, market and operational risk areas.

Pillar 2 : Supervisory Review Process : Regulating tools and
frameworks for dealing with peripheral risks that banks face.

Pillar 3: Market Discipline : Increasing the disclosures that banks
must provide to increase the transparency of banks

Major features of Basel III
Better Capital Quality

Capital Conservation Buffer

Countercyclical Buffer

Leverage Ratio

Liquidity Ratios

Systemically Important Financial Institutions


7
Agenda
Introduction
Challenges in Implementation
Conclusion
Implementation in EU
Timeline of Proposed Changes
Major Steps towards Implementation of Basel III
10
Agenda
Introduction
Challenges in Implementation
Conclusion
Implementation in EU
Challenges in Implementation
Challenges in Functional Implementation
How Banks Might Respond
14
Agenda
Introduction
Challenges in Implementation
Conclusion
Implementation in EU
Impact on RoE
Conclusion
European legislative implementation of Basel IIICRD IV
significantly increased the degree of harmonization within Europe
European bank reform has taken a constitutional turn, with the relocation
of substantial regulatory authority from the European Member States to
the ECB
Europes efforts would focus on the straightforward implementation of
the requirements of Basel III through a mix of Member State-level and
Brussels-level measures

Thank You