Basel Iii

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  • Topic: Capital requirement, Basel II, Tier 1 capital
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  • Published : April 4, 2013
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Basel III:
Issues and
implications
kpmg.com

Contents
1.

The background to a discussion on Basel III

2

2.

What are the key outcomes?

3

3.

A summary of qualitative impacts of the proposals

4

4.

Quantitative impacts of the proposals

5

5.

Basel III objectives and time lines

7

6.

Summary of the major Basel III recommendations
and implications

9

7.

Remaining questions

12

8.

Actions to consider

13

9.

What does the transformation roadmap look like?

14

10. How KPMG can help

15

11. Conclusion

16

© 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network ,
of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23815NSS

Basel III: Issues and implications | 1

Preface
In the aftermath of the financial crisis of 2008–2009, the Basel Committee of Banking Supervision (BCBS) embarked on a
program of substantially revising its existing capital adequacy guidelines. The resultant capital adequacy framework is termed ‘Basel III,’ and the G20 endorsed the new Basel III capital and liquidity requirements at their November 2010 Summit in Seoul. There are many areas of detail needing further development, and worldwide debate and lobbying will inevitably continue—most notably in relation to the whole issue of systemically important financial institutions (SIFIs). The core principles, however, are set, and complying with the Basel III framework is inevitable.

With the core framework being adopted by the national
authorities, the focus of attention is now shifting towards
implementation—determining business impact and planning for compliance. There are strong indications that even though the framework in principle is being adopted, actual implementation

will become divergent across various jurisdictions. Although the transitional period appears long, the 2019 deadline to complete implementation should not distract institutions from the need to demonstrate capital and liquidity resilience much earlier and meet interim deadlines along the way.

Despite a lack of absolute clarity, it would not be worthwhile to wait until all ambiguities have been resolved. Prior experience with the Basel II framework has shown that early analysis,
strategic evaluation, and robust planning are all crucial to success in the ultimate implementation. Firms must also remain flexible to adapt to subsequent changes and developments.
This document attempts to summarize the key details of the
Basel III capital adequacy framework and explores some of
the practical implications and considerations for firms to
establish an effective and efficient implementation procedure.

© 2011 KPMG LLP a Delaware limited liability partnership and the U.S. member firm of the KPMG network ,
of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 23815NSS

2 | Basel III: Issues and implications

The background to a
discussion on Basel III
The global economic crisis has provided an opportunity for a fundamental restructuring of the approach to risk and regulation in the financial sector. The Basel Committee on Banking Supervision (BCBS) has collectively reached an agreement on reforms to “strengthen global capital and liquidity rules with the goal of promoting a more resilient banking sector, which is being referred to as “Basel III. Under ”


Basel III, each area of proposed changes has a separate consultation, debate, and implementation phase. As a result, compared with the implementation of the...
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