The staggered implementation deadlines and discrepant requirements under various Basel-inspired frameworks magnify regional disparities - Australia, Canada, Hong Kong, Singapore, and Switzerland are further along in their implementations and have stayed true to the BCBS standards. The CRR3 legislation to implement the Basel III standards, aka Basel IV in the European Union, deviates from the BCBS guidelines as does the UK PRA’s Basel 3.1 proposal.
The shift from Basel III to Basel IV standards is a significant overhaul of banking systems and processes and with less than two years to the January 2025 implementation timeline, financial institutions have plenty to consider. Further, multi-region banks may have to operate under different Basel rules for different jurisdictions, making group consolidation and reconciliation difficult for compliance and reporting.
Adding to this complexity is how banks respond to and manage emerging risks such as ESG and Interest Rate Risk in the Banking Book (IRRBB)!
Financial institutions have traditionally approached risk management and regulatory reporting independently. The move to Basel IV is an opportunity for banks to consider building an enterprise view of all internal and regulatory metrics, across risk types and Pillar 1, 2 and 3. Such an approach while optimizing banking resources, enables stakeholders to meet management and regulatory expectations with timeliness.
Read our whitepaper Integrating Pillars 1, 2 and 3: A Better Way to Basel IV for a roundup of implementation timelines and learn how an integrated view of internal and regulatory metrics, risk reporting, scenario projections and strategic planning ensures more efficient risk management.
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