The Bank for International Settlements’ Basel Committee on Banking Supervision has launched a consultation on incorporating its existing treatment of cross-border exposures within the European Banking Union into the global systemically important bank assessment framework. The proposal follows a targeted review completed in 2022 and would codify the current supervisory approach in the Basel Framework and related reporting instructions. Under that approach, a parallel score is calculated for European Banking Union headquartered G-SIBs, recognizing 66% of the score reduction that would result from treating intra-union exposures as domestic. A relevant authority may propose using the parallel score to determine a bank’s bucket, but any downward adjustment is limited to one bucket. The calculation does not affect a bank’s G-SIB designation or the scores and bucket allocations of banks outside the union. The revisions would take effect immediately once finalized and would also incorporate the related data into disclosure requirements.
Bank for International Settlements’ Basel Committee consults on formalizing European Banking Union exposure treatment in G-SIB methodology
The Bank for International Settlements’ Basel Committee is consulting on codifying the existing treatment of intra-European Banking Union exposures in the G-SIB framework. Parallel scores would recognize 66% of the reduction from treating those exposures as domestic, with any downward bucket adjustment limited to one level and no effect on G-SIB designation or banks outside the union.