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BC Announces Delay to Basel III and Actions in Light of Covid-19 Pandemic

On March 27, the EU’s Basel Committee (BC) announced a delay to the introduction of Basel III until January 1, 2023 and a delay to the accompanying transitional arrangements for the output floor until January 1, 2028 (the Announcement).

The delay arises from the development of the Covid-19 pandemic and the subsequent need for regulators to provide the relevant regulatory relief. With this delay, banks should have more time to focus on critical services for the real economy. The Announcement will also ensure that the banking system remains financially and operationally resilient.

The Announcement also defers the implementation date of the revised market risk framework and the revised Pillar 3 disclosure requirements by a year to January 1, 2023.

In an earlier statement published on March 20, the BC discussed how the Basel III framework can be used during stressful circumstances, such as the Covid-19 pandemic (the Initial Statement). The measures include the various Basel III buffers, such as capital, liquidity, capital conservation and countercyclical capital buffers and buffers for systemically important banks. They also include using the banks’ stock of high-quality liquid assets to meet liquidity demands. In the Initial Statement, the BC notes that capital resources to support the real economy and absorb losses should take priority at present over discretionary distributions. Many supervisors are already encouraging banks to make use of these tools, which provide a flexible approach to responding to the current circumstances.

The Announcement is available here.

The Initial Statement is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 94


About this Author

John Ahern, Financial Attorney, London, Katten Law Firm

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

+44 (0) 20 7770 5253
Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...