Basel IV

The next generation of RWA

Australian insights

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February 2018 - APRA consultation on Revisions to the Capital framework
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December 2017: New "Basel IV" rules finalised. What is the impact in Australia?
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August 2017: IFRS 9 and the interactions with Basel IV.

Basel IV at a glance: 

Basel IV is the informal name for a suite of regulations which, taken together, represent a major change in the calculation of risk weighted assets. The regulation is being implemented in phases starting in 2018, and may take up to 7 years to be fully implemented with a stepped approach to applying capital increases already proposed in Europe.

Basel IV is not an official term, and BCBS generally refer to the completion of the Basel III programme of work. At PwC we consider Basel IV to be the suite of regulations focussed on determination of risk weighted assets, as distinct from earlier phases of Basel III which focussed on the definition of capital and updates to the liquidity regimes.

Basel IV regulations cover the following areas:

  • Credit Risk
  • Securitisation
  • Counterparty Credit Risk
  • Market Risk (the Fundamental review of the trading book)
  • Operational Risks
  • IRRBB
  • Step-in and other risks

On Thursday, December 7th 2017, the BCBS published several papers laying out the revised requirements for the calculation of risk-weighted assets (“RWAs”) and capital floors. These papers finalise the work that BCBS has undertaken since 2012 to calibrate the Basel III framework.

The reforms together with earlier publications that revise the calculation of RWAs, including the revised market risk framework published in January 2016, are collectively referred to as “Basel IV” by the industry. All changes are scheduled for one ‘big bang’ implementation on 1 January 2022, with the Capital floor scaling up over 5 years.

APRA, as a member of the Basel Committee, has generally implemented Basel regulations with only some local variation, and they have indicated that they will continue to do so. However, APRA have shown a willingness to take into account local considerations where they feel it is necessary and suitable for the Australian marketplace.

This page provides an Australian view of the global PwC Basel IV response, and will be updated as new regulatory developments take place.
 

PwC’s Basel IV Global Task Force:

PwC have set up a global team to bring together experts across the world in regulation, risk and a range of related disciplines, to ensure we can provide the most comprehensive and up to date information on Basel IV developments.

The Australian team provides local analysis of how the changes impact local banks, as well as enabling local clients to use the full global expertise of PwC.

See below for an update from the global leader. 

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Martin Neisen (Global Basel IV Leader) takes a look at the latest challenges and implications arising from Basel IV.

The Australian team provides local interpretation of the global regulations, and expert impact analysis. 
Full details of the team are provided here and to register for updates please follow the attached registration link.
 


Education materials:

PwC have developed a range of tools to help you understand the impacts of these regulatory changes.

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Previous editions of the Basel IV channel can be found here: PwC Basel IV channel 

Global Basel IV Channel

PwC has a strong global and local team to support our clients in responding to the comprehensive Capital changes proposed. As part of this we are committed to providing updated information in a prompt and flexible way about Basel IV. In addition to informing you through newsletters and through our website, we organise periodic seminars and have launched our Basel IV Channel. The Channel is a new medium to give you a periodical overview on current topics around Basel IV. It comprises a series of online lectures supported by slides. Within a time frame of 15 to 30 minutes we deliver you a compact overview of the current issues related to Basel IV.

Previous editions recorded in Europe can be viewed at the PwC Basel IV Channel.
 

Basel IV Poster

Our new Basel IV poster offers you an in-depth overview of all regulatory actions of the Basel Committee in relation with Basel IV.

From "Capital Floor" to "SA-CCR", from the new securitisation rules up to the CVA capital charge.

Our "Basel IV" poster shows the legal basis, identifies the relevant Basel papers and illustrates the interconnection's between the individual arrangements. By requesting your copy of the poster you receive a compact overview of all "Basel IV" related regulatory activities.

View our Basel IV Poster.
 

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Contact us

Colin Heath

Colin Heath

Leader - Banking and Capital Markets, PwC Australia

Tel: +61 3 8603 0137

Sarah Hofman

Sarah Hofman

Partner, Financial Services Assurance, PwC Australia

Tel: +61 (2) 8266 2231

Craig Stafford

Craig Stafford

Partner, PwC Australia

Tel: 612 8266 3725

Justin Waller

Justin Waller

Director, PwC Australia

Tel: +61 2 8266 0181

Nicole Karsten

Nicole Karsten

Director, PwC Australia

Tel: +61 (2) 8266 1765

Nick Scott

Nick Scott

Senior Manager, PwC Australia

Tel: +61 (3) 8603 0346

Sagan Rajbhandary

Sagan Rajbhandary

Senior Manager, PwC Australia

Tel: + 61 (2) 8266 5180

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