The Basel Committee on Banking Supervision finalised changes to curb window-dressing in the framework for global systemically important banks (G-SIBs). Banks will report and disclose indicators based on averages over the year instead of year-end values, to be implemented by 1 January 2030. The reporting threshold rises from EUR 200 billion to EUR 350 billion from 2027. The Committee is also consulting until 14 January 2027 on incorporating its treatment of cross-border exposures within the European Banking Union.

What it means: Window-dressing is the practice of a bank temporarily shrinking the size or complexity of its activities around the reference date so that it looks less systemic. That matters because the score sets how much extra capital a large bank must hold. The Committee has called the practice unacceptable, since it undermines the rules and can disrupt money markets at year-end, when banks cut back their activity at the same time. With averages, hiding becomes much harder, but banks need time to change their reporting systems, which is why implementation is pushed to 2030. Raising the threshold to EUR 350 billion reduces the number of banks that must report. The Banking Union consultation directly concerns Europe, since whether exposures between euro area countries count as cross-border affects the scores of large European banks. Greek systemic banks are not G-SIBs, but Basel standards are transposed into EU law and affect the market as a whole. The developments are worth following closely.

Read the original on Bank for International Settlements

Related service: myDATA integrations

Related stories