Basel Committee Finalizes Rules to Curb Bank Window-Dressing Practices

Key Facts

1The Basel Committee on Banking Supervision finalized amendments to address window-dressing practices within the Global Systemically Important Banks (G-SIB) framework.

2The Committee launched a public consultation on the methodology review used for assessing and identifying Global Systemically Important Banks.

The Basel Committee on Banking Supervision finalized amendments to address window-dressing practices within the Global Systemically Important Banks (G-SIB) framework. According to a statement from the Bank for International Settlements, the new rules require banks to report and disclose stock indicators based on an average of values over the reporting year rather than year-end values, aiming to constrain the ability of banks to temporarily lower their systemic scores.

The Committee also launched a public consultation on the methodology used for assessing these banks and agreed to increase the leverage ratio exposure reporting threshold from EUR 200 billion to EUR 350 billion starting in 2027. The revised standards are set for full implementation by January 1, 2030, to allow banks sufficient time to develop robust reporting processes, as the Committee noted that window-dressing undermines policy objectives and risks disrupting financial market operations.