Webinar: Navigating CRR III - a global perspective on Basel III implementation and financial stability

Date & Time: 4:00 PM - 4:45 PM CET, 27 November 2024

Audience: senior banking professionals – CFOs, Heads of Regulatory Reporting, Risk Officers, Banking Executives.

The session began with a warm introduction from David Hulmes, who outlined the main objectives of the webinar:

1. To provide a clear understanding of CRR III, its core objectives, and the regulatory changes it introduces.
2. To compare implementation timelines and approaches across jurisdictions, particularly the EU, UK, and US.

David gave an overview of Basel III, highlighting its aim to strengthen global financial stability by introducing minimum standards for capital, liquidity, and stress testing. He emphasised the importance of the Pillar 3 framework under the Capital Requirements Regulation, which promotes transparency in banks’ risk profiles and financial health.

Key themes discussed

CRR III objectives and global implementation

Vincent and Charlie explained the objectives of CRR III and Basel III and the differing regulatory approaches:

• Japan: Basel III fully implemented by March 2024.
• EU: CRR III effective from January 2025.
• UK: Basel 3.1 implementation scheduled for January 2026.
• US: Timelines currently remain uncertain.

Vincent highlighted the challenges SMBC faces as a Japanese-based global systemically important bank (G-SIB), operating across multiple jurisdictions with varying regulatory requirements. Charlie addressed the difficulties smaller banks face, particularly in securing resources and managing data under evolving regulations.

Key CRR III components

The session explored significant updates under CRR III:

• Credit risk: Vincent outlined changes to the standardised and internal ratings-based approaches, noting key differences between the UK and EU frameworks, particularly regarding infrastructure lending and real estate.
• Output floor and leverage buffer: the panel explained the phased introduction of the output floor from 2025 to 2029, designed to limit risk-weighted assets calculated using internal models. They discussed how transitional provisions might affect banks’ balance sheets differently, even within the same jurisdiction.

Operational challenges

The panellists considered the operational challenges of complying with multi-speed regulatory implementations:

• Resource management: Balancing the need to prepare early with the risk of overcommitting resources.
• Data consistency: Ensuring consistent data standards across jurisdictions to avoid inefficiencies and duplication.

Charlie stressed the importance of strong project management and strategic planning to navigate these complexities.

Audience questions and closing reflections

The webinar concluded with an insightful Q&A session. One question focused on the impact of the UK’s risk-sensitive approach on banks, prompting Vincent and Charlie to explore the operational and strategic implications.

In his closing remarks, David Hulmes summarised the key takeaways:

1. The importance of understanding jurisdictional differences in CRR III and Basel III implementation.
2. The challenges of managing multi-speed regulatory timelines while maintaining strategic alignment.
3. The critical role of data standardisation and technology in achieving compliance efficiently.

Featured speakers

• Vincent Baritsch, Head of Regulatory Policy, SMBC
• David Hulmes, Managing Director, Regulatory Success
• Charlie Quaterman, Technical Solutions Lead