Basel III Endgame: 2025 Shifts and 2026 Preparation

Our December 2025 webinar brought together Suade's Senior Implementation Specialist Kira Snow and Deloitte's Andrea Haskell Liptrot to cut through Basel III Endgame uncertainty. Attended by leaders from Santander, Revolut, HSBC, Citi, Bank of Montreal and Credit Agricole, the discussion separated fact from speculation. As 2025 closes, US proposals remain in flux, UK implementation targets 2027, and banks face a simple reality: change is coming regardless of final capital impacts.

What is Basel III Endgame?

Basel III Endgame refers to US regulators' 2023 proposals to finalise Basel III's post-crisis reforms. Dubbed the "Endgame" for completing global standards, these rules target risk-weighted asset (RWA) calculations across credit, market, operational and CVA risk. Proposals expanded standardised approaches, limited internal models, and pulled Category III/IV mid-sized banks into Basel frameworks for the first time.

Controversy erupted immediately. Banks argued the rules would raise RWA by 20-30% for large institutions, constraining lending when economies needed credit. Regional banks warned inclusion would crush smaller competitors. Over 1,000 comment letters forced regulators to pause, promising revisions by mid-2026.

Who Gets Affected and How

Kira Snow explained the broad scope: GSIBs face deepest cuts to internal models; Category II banks lose flexibility on credit/market risk; Category III/IV institutions (assets $100-250bn) confront Basel calculations they've historically avoided. Regional banks worry most: new operational risk floors and expanded standardised approaches hit loan books hardest.

Andrea Haskell Liptrot shared implementation patterns. Large banks model impacts using near-final global rules (UK Basel 3.1, EU CRR3), treating Endgame as calibration exercise. Mid-sized firms scramble: many lack granular data for expanded RWA drivers. Common strategy: pause major tech investments until Q2 2026 clarity, but accelerate data readiness.

2025 Developments: Delay, Not Derailment

Regulators responded to industry pressure. July 2025 guidance signalled "tailored" implementation, exempting some Category IV banks and softening operational risk floors. Public statements hint at expanded transition periods (3-5 years vs original 3). Final rules now expected mid-2026, aligning US closer to UK's January 2027 go-live.

Yet core direction holds: RWA calculations grow more granular, standardised approaches dominate, model approvals tighten. Banks cannot defer preparation: data lineage, controls and architecture upgrades deliver value regardless of calibration.

Global Fragmentation Challenges Cross-Border Banks

Andrea highlighted the biggest operational headache: divergence. UK Basel 3.1 emphasises real estate exposures; EU CRR3 prioritises derivatives; US Endgame targets operational risk. Cross-border firms build jurisdiction-agnostic platforms handling multiple RWA engines simultaneously. Data standardisation emerges as universal solution: one granular source powers UK Pillar 1, EU templates, US schedules.

2026 Preparation: Data First, Decisions Second

Kira outlined likely final rules: operational risk floors drop to 40-60% (vs 72.5% proposed); Category IV carve-outs for community banks; longer phase-ins. Regardless, banks face expanded attribute collection: collateral granularity, transaction-level credit risk drivers, standardised operational loss data.

Andrea's practical priorities for 2026:

• Data readiness: Granular positions, reference data, historical loss records underpin all scenarios. Standardised models with lineage beat ad-hoc fixes.
• RWA automation: Complex calculations demand industrialised engines. RegTech handles rule changes faster than internal rebuilds.
• Mid-sized bank focus: Category III/IV firms need most help. Legacy systems crumble under Basel granularity.

Regulatory spend shifts: less on final-state builds, more on flexible foundations. Banks reallocate to data architecture (40%), vendor evaluation (30%), pilot automation (30%).

Strategic Implications Beyond Capital

Even neutral capital outcomes force change. RWA expansion drives pricing recalibration, portfolio limits, funding decisions. Granular data enables risk-adjusted growth, not just compliance. Forward-looking banks view Endgame as data transformation accelerator.

How Suade Positions Banks for Endgame Success

Basel Endgame demands what Suade delivers: standardised data models absorbing bank source systems into Basel calculations; modular RWA engines running US, UK, EU parallel; AllTags lineage proving every number from trade to template. RegWatch tracks NPR updates, consultation responses, calibration signals.

Clients test US betas alongside live UK CRR2, gaining first-mover insight into RWA shifts. Mid-sized banks leverage Suade's Category III/IV configurations, avoiding expensive internal builds. Cross-border firms run jurisdiction comparisons natively.

Result: Endgame becomes strategic advantage, not regulatory scramble.

As 2026 begins, uncertainty remains but preparation does not. Banks investing in data foundations, automation and flexible platforms win regardless of final calibration. Suade turns Basel complexity into controlled execution.