Basel III International Banking Framework

International

v2017 (final reforms)

5 domains

26 controls

Basel III: International regulatory framework for banks, developed by the Basel Committee on Banking Supervision (BCBS). Strengthens bank capital requirements, introduces new requirements on bank liquidity and leverage, and enhances risk management. Published 2010-2017, with final reforms (sometimes called Basel IV) finalized in December 2017. Implementation ongoing through 2028.

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Framework Domains (5)

Pillar 1: Leverage Ratio

2 controls

Non-risk-based leverage requirement to constrain excessive leverage

Controls in the Pillar 1: Leverage Ratio domain of Basel III International Banking Framework — 2 controls
Code	Title	Description
BASEL3-LEV-1	Minimum Leverage Ratio	Banks must maintain a minimum leverage ratio of 3%, calculated as Tier 1 capital divided by total exposure measure (on-b...
BASEL3-LEV-2	G-SIB Leverage Ratio Buffer	G-SIBs must meet an additional leverage ratio buffer equal to 50% of their risk-weighted G-SIB surcharge.

Pillar 1: Liquidity Requirements

3 controls

Liquidity standards to ensure banks maintain sufficient liquid assets

Controls in the Pillar 1: Liquidity Requirements domain of Basel III International Banking Framework — 3 controls
Code	Title	Description
BASEL3-LIQ-1	Liquidity Coverage Ratio (LCR)	Banks must hold sufficient high-quality liquid assets (HQLA) to cover total net cash outflows over a 30-day stress scena...
BASEL3-LIQ-2	Net Stable Funding Ratio (NSFR)	Banks must maintain a stable funding profile in relation to their on- and off-balance sheet activities. Available stable...
BASEL3-LIQ-3	Liquidity Monitoring Tools	Supplementary monitoring tools including contractual maturity mismatch, concentration of funding, available unencumbered...

Pillar 1: Minimum Capital Requirements

12 controls

Minimum capital adequacy requirements for banks

Controls in the Pillar 1: Minimum Capital Requirements domain of Basel III International Banking Framework — 12 controls
Code	Title	Description
BASEL3-P1-1	Common Equity Tier 1 (CET1) Capital Ratio	Banks must maintain a minimum CET1 capital ratio of 4.5% of risk-weighted assets (RWAs) at all times.
BASEL3-P1-10	Market Risk (FRTB)	Fundamental Review of the Trading Book (FRTB): Revised framework for market risk with standardised approach and internal...
BASEL3-P1-11	Output Floor	Aggregate output floor ensuring that RWAs calculated using internal models cannot be less than 72.5% of RWAs calculated...
BASEL3-P1-12	Credit Valuation Adjustment (CVA) Risk	Revised framework for CVA risk requiring banks to capitalize the risk of mark-to-market losses on expected counterparty...
BASEL3-P1-2	Tier 1 Capital Ratio	Banks must maintain a minimum Tier 1 capital ratio (CET1 + Additional Tier 1) of 6% of risk-weighted assets.
BASEL3-P1-3	Total Capital Ratio	Banks must maintain a minimum total capital ratio (Tier 1 + Tier 2) of 8% of risk-weighted assets.
BASEL3-P1-4	Capital Conservation Buffer	Banks must hold an additional CET1 capital conservation buffer of 2.5% of RWAs, bringing the effective CET1 minimum to 7...
BASEL3-P1-5	Countercyclical Capital Buffer	National authorities may require banks to hold an additional countercyclical buffer of up to 2.5% of RWAs during periods...
BASEL3-P1-6	G-SIB and D-SIB Surcharges	Global systemically important banks (G-SIBs) must hold an additional CET1 surcharge of 1-3.5%. Domestic systemically imp...
BASEL3-P1-7	Credit Risk - Standardised Approach	Revised standardised approach for credit risk with more risk-sensitive treatment of exposures, reduced reliance on exter...
BASEL3-P1-8	Credit Risk - Internal Ratings-Based (IRB) Approach	Constraints on use of advanced IRB approaches including input floors for probability of default (PD) and loss given defa...
BASEL3-P1-9	Operational Risk	Single standardised measurement approach (SMA) for operational risk replacing all existing approaches. Based on Business...

Pillar 2: Supervisory Review

4 controls

Supervisory review process for bank-specific risks not fully captured by Pillar 1

Controls in the Pillar 2: Supervisory Review domain of Basel III International Banking Framework — 4 controls
Code	Title	Description
BASEL3-P2-1	Internal Capital Adequacy Assessment Process (ICAAP)	Banks must have an internal process to assess capital adequacy relative to their risk profile, including a strategy for...
BASEL3-P2-2	Supervisory Review and Evaluation	Supervisors should review and evaluate banks' internal capital adequacy assessments and strategies, and take appropriate...
BASEL3-P2-3	Interest Rate Risk in the Banking Book (IRRBB)	Banks must manage and disclose interest rate risk in the banking book. Supervisors may require additional capital for ba...
BASEL3-P2-4	Stress Testing	Banks should conduct rigorous stress testing to identify potential events or changes in conditions that could adversely...

Pillar 3: Market Discipline and Disclosure

5 controls

Disclosure requirements to promote market discipline

Controls in the Pillar 3: Market Discipline and Disclosure domain of Basel III International Banking Framework — 5 controls
Code	Title	Description
BASEL3-P3-1	Composition of Capital Disclosures	Banks must disclose full detail of the composition of regulatory capital including reconciliation between accounting bal...
BASEL3-P3-2	Risk-Weighted Assets Disclosures	Banks must disclose detailed RWA information for credit risk, market risk, operational risk, and CVA risk under both sta...
BASEL3-P3-3	Leverage Ratio Disclosures	Banks must disclose their leverage ratio and its components using a common template.
BASEL3-P3-4	Liquidity Disclosures	Banks must publish their LCR and NSFR on a quarterly basis using standardized disclosure templates.
BASEL3-P3-5	Dashboard and Key Metrics	Banks must publish a dashboard of key prudential metrics including capital ratios, leverage ratio, liquidity ratios, and...