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--- 0_public:regulations:basel [2024/12/23 12:42] – removed - external edit (Unknown date) 127.0.0.1
+++ 0_public:regulations:basel [2025/01/21 21:05] (current) – [Basel 4 / 3.1] pointnm
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+{{tag>finance}}
+====== Basel ======
+The group was established in 2007 to fill the credit gap after the introduction of Basel II & III caused banks to withdraw from lending in emerging markets. Today Scipion’s in-house team of 18 investment, operational management and legal experts offers SMEs a one-stop solution to their financing requirements.
+==== Basel I ====
+<wrap hi>Basel I (1988) focused on credit risk</wrap>, Basel II (2004) included operational and market risks, and Basel III (post-2008 crisis) aimed to strengthen bank capital requirements and improve risk management.((https://archive.ph/kVrEG#selection-2575.0-2575.201))
+==== Basel II ====
+Basel I (1988) focused on credit risk, <wrap hi>Basel II (2004) included operational and market risks</wrap>, and Basel III (post-2008 crisis) aimed to strengthen bank capital requirements and improve risk management.((https://archive.ph/kVrEG#selection-2575.0-2575.201))
+==== Basel III ====
+Basel I (1988) focused on credit risk, Basel II (2004) included operational and market risks, and <wrap hi>Basel III (post-2008 crisis) aimed to strengthen bank capital requirements and improve risk management</wrap>.((https://archive.ph/kVrEG#selection-2575.0-2575.201))
+The Basel III proposals signify a global regulatory shift for banks, focusing on increased capital requirements and refined risk weight calculations.((https://archive.ph/kVrEG#selection-2539.0-2539.149))
+In the US, this implementation is called the ‘Basel endgame,’ while the UK refers to it as Basel 3.1 and the EU calls it Finalised Basel III.((https://archive.ph/kVrEG#selection-2543.0-2543.141))
+The Basel Committee on Banking Supervision established Basel regulations in response to financial turmoil in the late 1970s.((https://archive.ph/kVrEG#selection-2571.0-2571.124))
+The 2008 financial crisis revealed significant shortcomings in Basel II, leading to Basel III, which introduced more stringent capital requirements, new risk weight calculations, and a revised leverage ratio framework.((https://archive.ph/kVrEG#selection-2579.0-2583.125))
+Implementation has been pushed back to 1 January 2025 for the EU, and 1 July 2025 for the UK and US. Canada and Australia have already adopted Basel III.((https://archive.ph/kVrEG#selection-2603.0-2611.54))
+The Basel endgame focuses on increasing capital against credit, market, and operational risks, significantly impacting lending costs and availability.((https://archive.ph/kVrEG#selection-2615.0-2615.150))
+While the Standardised approach does not allow modelling, Advanced Internal Ratings-Based (A-IRB) banks previously modelled probabilities and loss given defaults (LGDs).((https://archive.ph/kVrEG#selection-2619.0-2619.170))
+Basel III removes this flexibility by setting input floors (LGDs at 40% for corporates and 45% for financial institutions) and an output floor (capital requirements cannot be less than 72.5% of the Standardised equivalent).((https://archive.ph/kVrEG#selection-2623.0-2623.223))
+==== Basel 4 / 3.1 ====
+As the year draws to a close, many bankers are preparing – in some cases anxiously – for the <wrap hi>start date of Basel 4 in the EU on January 1, 2025 (known as Basel 3.1 in the UK)</wrap>.((2024))
+The Basel 3.1 regime, which <wrap hi>went into effect on 1 January (2025) in the EU</wrap>, would likely <wrap hi>affect the capital requirements of credit insurance providers, while keeping standards for trade finance largely the same</wrap>.((https://archive.ph/Y0dnn#selection-2371.0-2378.0))
+Basel 3.1 is a <wrap hi>set of regulations intended to increase the amount of equity kept by banks in order to make them more resilient to times of stress and avoid the bailouts and collapses of 2008</wrap>. The announcement of the regulations by the US Federal Reserve in 2023 faced a strong backlash from the US banking sector, leading the American regulator to announce less restrictive standards and delay setting a timeline for their implementation. The PRA also modified the rules to reduce the burden on banks and financial institutions last year.((https://archive.ph/Y0dnn#selection-2381.0-2386.0))