2 minute read 22 Sep 2023
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Basel III Endgame: what you need to know

Adam Girling
By Adam Girling

Principal, Financial Services, Ernst & Young LLP

Helps clients solve their most complex financial challenges. Husband and father. Enjoys running, cycling and skiing.

2 minute read 22 Sep 2023
Related topics Banking and Capital Markets Risk and regulation in banking Financial Services Risk
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Basel III Endgame (B3E) is the latest update to global capital standards — a dramatic change to the current US risk-based capital framework.

In brief

  • US regulators have proposed July 2025 for compliance with the new requirements, with a multiyear transition period.
  • Banks have approximately two years to interpret the new rules, assess their impact, address new data and tech needs, and adjust business strategies.
  • B3E is a chance to modernize capital infrastructure: updating tech, becoming more agile and addressing inefficiencies to lower operating costs.

The Notice for Proposed Rulemaking (the NPR or the proposal) for the Fundamental Review of the Trading Book (FRTB) and Basel III Finalization (collectively Basel III Endgame (B3E)) was jointly published on July 27, 2023, by the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).

B3E represents a sea change for the US banking industry, significantly altering the regulatory capital regime for US banks. The proposal would modify how the largest US banks think about regulatory capital and extends more granular, rigorous requirements to US regional and midsized banks.

Meeting these requirements and building on them to better understand and manage business and portfolio profitability will require an enterprise-wide effort. The EY organization is here to help you navigate the Basel III Endgame.

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Richard Tuosto co-authored the article.

Summary

The B3E US NPR proposes updates to the regulatory capital rules that would bring dramatic changes to the current US risk-based capital framework. With a proposed compliance date of July 1, 2025, US banks will have approximately two years to interpret the new rule, address new data and technology needs, and adjust business models. In a climate of increased regulatory scrutiny, firms will need to establish disciplined programs to drive successful implementation of the rule. B3E presents an opportunity for banks to modernize their capital infrastructure through technology, agility and efficiency.

About this article

Adam Girling
By Adam Girling

Principal, Financial Services, Ernst & Young LLP

Helps clients solve their most complex financial challenges. Husband and father. Enjoys running, cycling and skiing.

Related topics Banking and Capital Markets Risk and regulation in banking Financial Services Risk
Upvote