Article

Finalised Basel III

Since the Great Financial Crisis (GFC), the Basel Committee has worked on the reform of the Basel framework, culminating in the “Finalised Basel III” framework (often unofficially referred to as "Basel IV").

While Basel III initially focused on the reform of liquidity regulations, the finalised version has introduced more stringent prudential requirements across all risk types, affecting both standardised and internal approaches in terms of scope, methodologies, and restrictions on these in an attempt to reduce variations resulting from banks’ internal models. It also mandates all banks to implement standardised approaches.

 

Delivery

In South Africa, the components of the finalised Basel III framework go live at various points in time between 2022 and 2025. Aside from introducing new capital calculations, the finalised framework also results in a number of other challenges, such as:

  • Impact of the output floor on not only the bank’s capital charge, but also key decision-making regarding the implementation of internal vs. standardised approaches;
  • Extensive new data requirements;
  • Changes required in operating models, organisational structures and governance, including processes and controls;
  • Increased regulatory and public disclosure reporting requirements.

 

Deloitte Offerings

Deloitte can support with the end-to-end implementation for each requirement, not only in terms of the new calculations, but also:

  • Programme Management
  • Business strategy
  • Capital Analysis
  • Models & Methodology
  • Reporting and disclosure
  • Data requirements
  • Post implementation review
  • Governance & policy frameworks 

 

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