Basel Committee Revises G-SIB Assessment Framework
Overview
The Basel Committee on Banking Supervision published a final document revising some provisions of the G-SIB assessment methodology. It changes many G-SIB selection indicators to annual averages to curb window-dressing, in which firms temporarily adjust positions or other items near reporting and disclosure reference dates to lower their assessment. The Committee also published a consultation paper on whether to incorporate the treatment of cross-border exposures within the European Banking Union into the framework. Comments must be submitted in English by January 14, 2027.
Key points
- Many G-SIB selection indicators will shift to annual averages to curb window-dressing.
- A consultation paper was published on the treatment of cross-border exposures within the European Banking Union.
- The deadline for consultation comments is January 14, 2027.
Overview
On October 16, the Basel Committee on Banking Supervision published the final document, “Global systemically important banks (G-SIBs) — Revisions to the assessment framework to address window-dressing.” It revises some provisions of the G-SIB assessment methodology in the “Consolidated Basel Framework,” published in December 2019, and was finalized following the public consultation launched in March 2024.
The consultation paper, “Review of the G-SIB assessment methodology,” seeks views on whether to incorporate into the G-SIB framework the treatment of cross-border exposures within the European Banking Union (EBU), agreed in 2022.
Details
Window-dressing refers to regulatory arbitrage in which a firm temporarily adjusts positions or other items near the reporting or disclosure reference date for G-SIB selection data, seeking to lower its assessment of systemic importance. As a countermeasure, many selection indicators will change from values near the reference date to averages across the year.
Comments on the consultation paper must be submitted in English to the Basel Committee by January 14, 2027.