2021/03/16

The European Banking Authority (EBA) published a decision making the Basel III monitoring exercise mandatory from December 2021, with the aim to expand the sample to more jurisdictions and credit institutions on a sound legal basis. The initiative introduces a methodology on how institutions should be chosen for the sample, taking proportionality into account. Basel III data would be reported less frequently, i.e., annually, and only a part of the Basel templates would be mandatory. Each member state should use the following selection criteria to define their country sample:

  • all global and other systemically important institutions (G-SIIs and O-SIIs) at the highest level of EU consolidation, irrespective of their size; plus,
  • If 80% risk-weighted asset (RWA) coverage is not exceeded and the sample is smaller than 30 banks, additional large banks (Tier-1 capital > EUR 3 billion or Total Assets > EUR 30 million) until 80% RWA coverage is exceeded; and
  • If 80% RWA coverage is still not exceeded, additional medium-sized and small banks from the eligible population of three different broad business models according to predefined percentages per business model; except for
  • small jurisdictions (member state’s RWA < 0.5% of the total EU RWA), for which participation is limited to G-SIIs, O-SIIs and additional large banks, irrespective of whether the 80% RWA coverage is exceeded or not.
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