Bank for International Settlements' Basel Committee finalizes G-SIB averaging rules and raises reporting threshold to EUR 350 billion

The Bank for International Settlements' Basel Committee on Banking Supervision has finalized changes to the global systemically important bank assessment framework to prevent banks from temporarily reducing systemic importance indicators at year-end. Stock indicators will be calculated using averages over the reporting year rather than year-end values, reducing the risk that G-SIB scores and resulting higher loss absorbency requirements understate banks' systemic importance. The amendments follow the Committee's March 2024 consultation and its recent approval of the revisions. All reporting banks must use at least quarterly averages for stock indicators. G-SIBs and near-G-SIBs, defined as banks with a score of at least 100 basis points in the previous year's assessment, must use daily, monthly or quarterly averages depending on the indicator and underlying data. National authorities may require higher-frequency calculations. The Committee also raised the reporting and disclosure threshold from EUR 200 billion to EUR 350 billion in leverage ratio exposure, including exposures from insurance subsidiaries, based on the previous year-end. The higher threshold takes effect on Jan. 1, 2027. A transition begins on Jan. 1, 2028, when banks will report year-end values and averaged values on a best-efforts basis, with supervisors expected to apply judgment where material differences arise. The averaging requirements take effect on Jan. 1, 2030, using higher-frequency data collected from Jan. 1, 2029.