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The Basel Accords

The Basel Accords are a series of banking regulations agreed by The Basel Committee on Banking Supervision (BCBS), a group comprising representatives from 27 major financial centres which aims to regulate finance and banking practices on an international level.

Basel I, II and III were agreed in 1998, 2004 and 2013 respectively.

This page gives an overview of the Basel Accords and their implications for financial institutions. It also covers Basel certification and training options.

What's on this page?

 

Basel II – 2004

The purpose of Basel II was to ensure the liquidity of banks by stipulating the minimum levels of capital that financial institutions needed to put aside to offset potential losses from investment and lending. The Accord required banks to hold 2% of common equity and 4% of Tier 1 capital. By regulating this on an international level, Basel II attempted to ensure that no single national system could develop an unfair competitive advantage.

The Three Pillars of Basel II

Minimum Capital Requirements
Supervisory Review

Market Discipline
The regulations were not popular with the banking industry, which generally believed self-regulation would be more effective.



Basel III - 2013

Following the banking crisis of 2007/08 a new, strengthened iteration of the Basel Accords was released: Basel III. This Accord was announced in January 2013, with an introduction schedule running to 2018.

Basel III built on the 2004 version by:

  • increasing common equity requirements to 4.5%;
  • increasing Tier 1 capital requirements to 6%;
  • introducing a minimum leverage ratio (Tier 1 capital divided by assets) of 3%;
  • introducing two required liquidity ratios (one, the Liquidity Coverage Ratio, requiring a bank to hold sufficient liquid assets to cover its net cash outflow for 30 days; the other, the Net Stable Funding Ratio, requiring available funding to exceed the required amount of stable funding “over a one-year period of extended stress”).

 

Basel certification and training

One of the ways professionals within the banking industry can demonstrate their understanding of Basel III regulations is by achieving certification.

This qualification shows a high level of knowledge, professional practice, ethical conduct and a commitment to professional development.

The Basel III - Certified Professional Training Course offers a 97% pass rate and ensures delegates are in the best possible position when attempting certification.

It closely follows the accord’s principles and practices, providing the practical knowledge and skills required to follow Basel III.

Click here for more information about this Basel III training course.