BASEL, Switzerland, June 11 (Global Risk Regulator) – Implementation of the post-crisis Basel III bank safety rules could be weaker in the United States, the European Union and Japan than the globally-agreed standards in some key areas, according to global banking regulators.

Basel Committee chairman Stefan Ingves said a number of countries have missed the globally-agreed implementation dates for Basel II (the risk-based bank capital adequacy framework) and Basel 2.5 (the additional requirements on market activities and securitisations). These countries’ ability to meet the January 1, 2013 implementation deadline for Basel III could prove a significant challenge,” Ingves said. Basel II and 2.5 now form integral parts of Basel III.

The Committee’s implementation review process includes three levels: ensuring timely adoption of Basel III (level 1); ensuring consistency of domestic regulations with Basel III (level 2); and ensuring consistency of risk-weighted asset (RWA) outcomes (level 3).

The preliminary level 2 findings are subject to further detailed analysis “but this report highlights key areas where domestic implementation may be weaker than the globally-agreed standards,” Ingves said.

The United States is also among the seven, out of the Basel Committee’s 27 member countries, that have yet to issue draft Basel III regulations. The other jurisdictions are Argentina, Hong Kong, Indonesia, Korea, Russia, and Turkey. The majority of these countries believe they can issue final rules in time to start implementing them in 2013, the Committee said. But for others, depending on their domestic rule-making process, meeting the deadline could be a significant challenge.

Among the 29 global systemically important banks (G-SIBs) identified in November 2011 which are liable to capital surcharges of up to 2.5%, nine are headquartered in jurisdictions that have not yet fully implemented Basel II and/or Basel 2.5, the Committee said.

The level 3 assessments analyse the consistency of RWAs in the banking book and trading book across banks and jurisdictions. The work is exploratory at this stage but could eventually lead to policy recommendations to deal with potential inconsistencies, the Committee noted.

Level 1 progress reports will continue to be published on a six-monthly basis. The full results for the first three Level 2 assessments of the EU, Japan and the US are expected to be published by the Committee around the end of September 2012. The two Level 3 assessments of risk-weighted assets in the banking book and the trading book will deliver initial findings to the Committee by the end of 2012.

(Basel Committee: www.bis.org)

David Keefe (dkeefe@globalriskregulator.com)