Is your bank ready for Basel Endgame?

On February 13, US regulators submitted revised Basel III Endgame rules to the Office of Management and Budget. This marks the formal restart of a process that stalled after fierce industry pushback in 2023-24.

The FDIC and OCC filed draft regulations covering regulatory capital and the standardised approach for calculating risk-weighted assets. The Federal Reserve has not yet submitted its version. Fed Vice Chair Michelle Bowman signalled in September 2025 that regulators were targeting an early 2026 re-proposal.​

This follows the effective collapse of the July 2023 Notice of Proposed Rulemaking. That drew more than 2,200 comment letters from banks, trade associations, and industry groups. Critics argued the original proposal would have imposed capital increases averaging 19% on banks with assets over $100 billion. They said it would constrain lending capacity and diverge sharply from how other jurisdictions were implementing Basel standards.​

Regulators acknowledged the criticism. Federal Reserve Vice Chair for Supervision Michael Barr said in September 2024 that the agencies would make "broad and material changes" to the proposal. The question now is what those changes look like.​

What banks can expect from the revision

Details remain confidential until the OMB completes its review. The revised framework will almost certainly retain the core elements of Basel III finalisation. Banks should expect tighter constraints on internal models, expanded use of standardised approaches, and a 72.5% output floor limiting how much capital relief models can provide.

The original proposal hit Category III and IV banks particularly hard, especially those with significant trading operations or derivatives exposures. Revised calibrations may ease some of these impacts, particularly for mid-sized regional institutions that argued they were being subjected to standards designed for global systemically important banks.

Regulators remain under pressure to align US rules more closely with international standards. The Basel Committee expects full and consistent implementation across member jurisdictions. European banks have begun operating under finalised Basel 3.1 frameworks. The UK's Prudential Regulation Authority implemented its version with a January 2027 go-live, giving European institutions a head start in adapting to the new regime.​

Current industry estimates suggest the revised proposal could increase risk-weighted assets by 10% to 16%, down from the 19% flagged in 2023. Even at the lower end, this represents a material shift in how banks calculate capital requirements across credit, market, and operational risk.​

The data and systems challenge

Regulatory changes of this scale expose weaknesses in how banks have built their capital infrastructure. Many large institutions still rely on systems where risk weights, floors, and calculation methodologies are hardcoded into proprietary engines. Each time regulators revise a parameter, these banks face months of recoding, retesting, and revalidation.

The cost is not trivial. Banks that have gone through Basel revisions before know that hardcoded systems can require six-figure expenditures per iteration. Basel Endgame will not be a one-time event. Rules will evolve between now and final implementation, currently expected to phase in through 2030.​

Institutions that have invested in modular, data-driven platforms are in a different position. When risk weights change or new floors are introduced, these systems allow parameters to be updated without rebuilding core calculation engines. Suade clients running under the UK's Basel 3.1 regime have demonstrated this capability. They rerun full capital stacks overnight following PRA clarifications.

The gap between legacy and modern infrastructure shows up in several ways. Banks with siloed data pipelines struggle to meet the granular reporting templates regulators now require. Model validation processes lag when new standardised sensitivities are introduced. When boards or stress testing teams need rapid scenario analysis, systems without API connectivity cannot deliver.

Forward-looking setups handle these requirements as core functionality. Configurable RWA engines accommodate output floors and jurisdiction-specific variations out of the box. Parallel run automation lets banks dry-test regulatory revisions before they take effect. Audit trails provide the compliance lineage regulators increasingly demand in supervisory reviews.

Why 2026 matters

Political and economic uncertainty could still reshape the final proposal. The Trump administration has signalled scepticism about regulatory expansion. Upcoming Federal Reserve vacancies may shift the balance of opinion at the board level. Waiting for certainty is not a viable strategy.

Banks operating under live Basel 3.1 frameworks in the UK and EU have already worked through the data quality, model validation, and process automation challenges that US institutions will face. Firms that use this window to build robust infrastructure will have tested systems in place when US rules go live, rather than scrambling to meet deadlines.

For mid-sized institutions, the cost of inaction is particularly high. Building internal capital engines from scratch can easily exceed $10 million. That does not account for ongoing maintenance as rules evolve. Cross-border banks face the added complexity of toggling between US, UK, and EU jurisdictions, each with its own calibrations and reporting templates.

What senior leaders should do now

Regulators have made clear that data foundations will be a supervisory priority in 2026. The PRA has already issued letters flagging data quality and lineage as areas of focus during examinations. Banks that continue to rely on spreadsheets and manual reconciliation processes are likely to face remedial requirements.​

The immediate steps are straightforward. Monitor OMB dockets as the review process unfolds. Run scenario analysis on your current systems to understand how long it would take to implement a 5% change in the output floor or a revision to operational risk parameters. If the answer is measured in months rather than days, the infrastructure is not ready.

Engage with vendors that can demonstrate live Basel implementations, not prototypes. Ask how their platforms handle multi-jurisdictional reporting, what their clients' experience has been during parallel runs, and how quickly configurations can be updated when regulators issue clarifications.

Basel Endgame is not a compliance exercise to be managed and forgotten. It is an opportunity to modernise capital infrastructure in ways that deliver ongoing business value. Banks with agile systems can run sensitivity analyses that inform lending strategies, pricing decisions, and hedging programmes. Those treating it as a one-off project will find themselves back in crisis mode the next time regulators adjust the rules.

The revision process has begun. How banks prepare over the next 12 months will determine whether they meet the standard or set it.

About Suade

Suade provides end-to-end automation of regulatory reporting for financial institutions, ensuring compliance with evolving global standards. Our cloud-native platform streamlines reporting, reduces manual processes, and enhances data accuracy from last-mile reporting to full calculation across any jurisdiction.

Book a demo to see how Suade can transform your regulatory reporting and keep your organisation ahead of regulatory change.