Welcome to the KPMG Insights page for Basel 4. Here you will find regulatory updates and analysis, links to KPMG tools and details of who to contact for support implementing your bank's Basel 4 programme.

Regulators and banks agree that the measures introduced so far under the Basel Framework have helped the financial sector to weather the shock of the COVID-19 pandemic. Attention is turning to implementation of the Basel 3 final reforms, commonly referred to as Basel 4.

The final elements of Basel 4 were agreed by the Basel Committee for Banking Supervision (BCBS) in December 2017, including substantial revisions to the capital treatment of credit risk, operational risk and the credit valuation adjustment (CVA), the application of an output floor to limit variability in how banks risk-weight their assets, revisions to the definition of the leverage ratio and the application of the leverage ratio to global systemically important banks. The revised market risk framework had already been largely finalised in January 2016, with final amendments published in January 2019. A set of limited and targeted final adjustments to the CVA framework were issued in July 2020.

The path to implementation has not been smooth. The pandemic resulted in deferral of BCBS's intended implementation timeline by one year to 1 January 2023. Banks in some jurisdictions have since lobbied for further delays to enable them to continue to support the recovery and deliver on their digital and sustainable finance agendas.

In October 2021, the European Commission delivered its interpretation of the Basel standards through proposed amendments to the Capital Requirements Regulation (CRR3). EU implementation is planned to run from 1 January 2025 to 1 January 2030. Further regulatory announcements are required to implement Basel 4 in the US and UK (expected in Q1 and Q4 2022 respectively). The UK PRA has clarified its intention for Basel 4 requirements to be implemented from 1 January 2025 — in alignment with the EU.

With uncertainty still remaining on regional interpretations, banks face significant challenges as they stand up or refresh their Basel 4 programmes. Banks will need to ensure that they are well prepared to handle potential divergences in requirements across jurisdictions. And all will be looking to achieve compliance within the required timelines and in a cost effective manner.

Implementation timeline

  

Implementation timeline

How KPMG can help

Basel 4 is broad in scope and impact. KPMG has the credentials and expertise to support you in all aspects of your Basel 4 implementation including: 

  • Carrying out gap assessments and implementation plans 
  • Planning for and managing any increase in capital requirements
  • Upgrading data, systems and (internal and external) reporting
  • Applications to use internal model approaches (where these are still available)
  • Asset portfolio adjustments and balance sheet optimisation in reponse to changes in risk weightings 
  • Assessing the revised capital standards in the context of all other regulatory reforms and market developments
  • Sharing industry knowledge through benchmarks and surveys
Working with industry

Frequently Asked Questions

KPMG is developing a bank of frequently asked questions to share with our clients. If you would like to submit a question for our industry experts please send it to go-fmemafsriskandreg@kpmg.com.

Please note that this forum is for technical or regulatory questions. Please do not submit client-specific enquiries via this link.

Key Contacts

Our contacts across the globe are ready to support your Basel 4 journey:

Key contacts

  

  

For more regulatory insights, contact the KPMG EMA Regulatory Insight Centre:

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