BIS: Basel III capital ratios surpassed pre-pandemic levels in H2 2022

  • Initial Basel III capital ratios increased above pre-pandemic levels in the second half of 2022 and liquidity coverage ratios declined but remained above pre-pandemic levels.
  • The average impact of the final Basel III framework on Tier 1 minimum required capital of the largest global banks (+3.0%) increased by 20 basis points since the first half of 2022 (+2.8%).

The Bank for International Settlements released a report showing that after a downturn in the first half of 2022, initial Basel III capital ratios for a sample of the largest global banks increased above pre-pandemic levels in the second half of 2022. The leverage ratio further increased on average, driven by Europe and the Americas, after showing an overall decrease during the pandemic period.

The dividend payout ratio continued its upward trend as banks no longer faced restrictions on dividends that member jurisdictions introduced at the onset of the pandemic.

For the reporting period, the average impact of the fully phased-in final Basel III framework on the Tier 1 minimum required capital (MRC) of Group 1 banks was +3.0%, compared with +2.8% at end-June 2022. Group 1 banks reported total regulatory capital shortfalls amounting to €3.2 billion, compared with a shortfall of €7.8 billion at end-June 2022.

Group 1 banks are defined as internationally active banks that have Tier 1 capital of more than €3 billion ($3.2bn) and include 29 institutions that have been designated as global systemically important banks (G‑SIBs).

The monitoring exercises also collect bank data on Basel III liquidity requirements. The weighted average Liquidity Coverage Ratio (LCR) decreased from the prior reporting period to 132.0% for Group 1 banks but remained close to pre-pandemic levels. For this reporting period, three Group 1 banks reported an LCR below the minimum requirement of 100%.

The weighted average Net Stable Funding Ratio (NSFR) increased to 124.4% for Group 1 banks. For this reporting period, all banks reported an NSFR above the minimum requirement of 100%.

Overview of results  
  30 June 20221 31 December 2022
Group 1 Of which:
Group 1 Of which:
Initial Basel III framework        
CET1 ratio (%) 12.7 12.6 13.1 13.1
Target capital shortfalls (€ bn)2 0.0 0.0 0.0 0.0
TLAC shortfall 2022 minimum (€ bn) 35.1 35.1 34.4 34.4
Total accounting assets (€ bn) 81,839 59,482 80,915 55,405
Leverage ratio (%)3 5.8 5.7 6.1 5.9
LCR (%) 138.2 137.5 132.0 134.2
NSFR (%) 123.5 125.2 124.4 126.7
Fully phased-in final Basel III framework (2028)        
Change in Tier 1 MRC at the target level (%) 2.8 3.2 3.0 2.9
CET1 ratio (%) 12.5 12.5 12.7 12.8
Target capital shortfalls (€ bn); of which: 7.8 7.8 3.2 3.2
       CET1 3.5 3.5 0.0 0.0
       Additional Tier 1 1.9 1.9 0.0 0.0
       Tier 2 2.4 2.4 3.2 3.2
TLAC shortfall 2022 minimum (€ bn) 29.8 29.8 37.4 37.4
Leverage ratio (%)3 6.0 5.9 6.1 6.0
CET1 = Common Equity Tier 1; LCR = Liquidity Coverage Ratio; MRC = minimum required capital; NSFR = Net Stable Funding Ratio; TLAC = total loss-absorbing capacity.

1  The values for the previous period may slightly differ from those published in the end-December 2021 report at the time of its release. This is caused by data resubmissions for previous periods to improve the underlying data quality.    2  Uses the 2017 definition of the leverage ratio exposure measure.    3  The leverage ratios reflect temporary exclusions from leverage exposures introduced in some jurisdictions.

Source: Basel Committee on Banking Supervision.

Read the full report 

Related Posts

Previous Post
The big keep getting bigger, so how can smaller prime brokers and hedge fund managers compete?
Next Post
Endoxa, a consortium of five global banks, launches Position Reporting Utility

Fill out this field
Fill out this field
Please enter a valid email address.


Reset password

Create an account