Basel III implementation assessments of Argentina and Korea published by the Basel Committee
21 September 2016
Today the Basel Committee on Banking Supervision published reports assessing the implementation of the Basel risk-based capital framework and the Liquidity Coverage Ratio (LCR) for Argentina and Korea. These form part of a series of reports on Basel Committee members' implementation of Basel standards under the Committee's Regulatory Consistency Assessment Programme (RCAP). A key component of the RCAP is to assess the consistency and completeness of a jurisdiction's adopted standards and the significance of any deviations from the regulatory framework. The RCAP does not take account of a jurisdiction's bank supervision practices nor does it evaluate the adequacy of regulatory capital and high-quality liquid assets for individual banks or a banking system as a whole.
Overall, the assessment outcomes for both Argentina and Korea are positive and reflect various amendments to the risk-based capital and LCR rules undertaken by the authorities during the respective assessments. The Basel Committee noted that several aspects of the domestic rules in both countries are more rigorous than required under the Basel framework.
Overall, the domestic implementation of the risk-based capital framework is found to be "compliant" with the Basel standards. Ten of the 11 assessed components of the framework are assessed as compliant and one - the scope of application - is assessed as "largely compliant". Argentina is also assessed as "compliant" with the Basel LCR standards, including the LCR regulation and the LCR disclosure standards. A compliant assessment grade is the highest of the four possible grades.
Overall, the domestic implementation of the risk-based capital framework is found to be "largely compliant" with the Basel standards, reflecting the fact that most but not all provisions of the Basel standards are satisfied. Specifically, 12 of the 14 components of the framework are assessed as compliant while two components - the definition of capital and the transitional arrangements - are assessed as largely compliant and "materially non-compliant", respectively. A "largely compliant" assessment grade is one notch below the highest possible grade. Regarding the LCR, Korea is assessed as "compliant" with the Basel LCR standards, including the LCR regulation and the LCR disclosure standards.
In carrying out the reviews of Argentina and Korea, the assessment teams held discussions with senior officials and technical staff of the Central Bank of Argentina and the Financial Supervisory Service of Korea. The teams also met with a select group of banks in both countries.
Notes to editors
The Basel Committee on Banking Supervision consists of senior representatives of bank supervisory authorities and central banks. Member countries include Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, Spain, South Africa, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.
The RCAP is a central element of the Basel Committee's continuing efforts to promote timely adoption of its standards and to monitor its members' full and consistent compliance with the Basel framework. The RCAP also helps member jurisdictions identify deviations from the Basel framework, weigh the materiality of any deviations and undertake necessary reforms. Based on the findings of these assessments, many assessed jurisdictions have already amended their regulations to align them more closely with the Basel framework, thereby helping to promote global financial stability and a level playing field for internationally active banks.
The Basel Committee has previously published jurisdictional assessments of Australia, Brazil, Canada, China, the European Union, Hong Kong SAR, India, Japan, Mexico, Russia, Saudi Arabia, Singapore, South Africa, Switzerland, Turkey and the United States.