Navigating CRR III - a global perspective on Basel III implementation and financial stability

Suade, a leading provider of regulatory and risk reporting solutions for the banking and financial sector, recently hosted a thought-provoking webinar focusing on CRR III implementation and a global perspective on Basel III’s finalisation. This session was part of Suade’s ongoing thought leadership series, designed to bring together industry experts to discuss pressing regulatory topics.

The webinar provided an opportunity to explore CRR III’s key objectives, its regulatory changes, and how its implementation timelines differ across jurisdictions such as the EU, UK, US, and Japan. It also considered the implications for global financial stability and operational challenges for banks.

Opening Remarks
The session began with a warm introduction from David Hulmes, who outlined the main objectives of the webinar:

To provide a clear understanding of CRR III, its core objectives, and the regulatory changes it introduces.
To compare implementation timelines and approaches across jurisdictions, particularly the EU, UK, and US.
David gave an overview of Basel III, highlighting its aim to strengthen global financial stability by introducing minimum standards for capital, liquidity, and stress testing. He emphasised the importance of the Pillar 3 framework under the Capital Requirements Regulation, which promotes transparency in banks’ risk profiles and financial health.

Expert Panel Contributions
The webinar featured two esteemed panellists:

Vincent Baritsch, Head of Regulatory Policy at SMBC EMEA, who shared his extensive experience in regulatory policy, including the implementation of Basel III/CRR III.
Charlie Quarterman, Technical Solutions Lead at Suade, who brought his expertise in using technology to help financial institutions navigate and fulfil regulatory requirements.
The session was highly interactive, with attendees encouraged to submit questions anonymously via the chat function. A live poll provided additional engagement, offering insights into participants’ views on key topics.

Key Themes Discussed
CRR III Objectives and Global Implementation
Vincent and Charlie explained the objectives of CRR III and Basel III and the differing regulatory approaches:

Japan: Basel III fully implemented by March 2024.
EU: CRR III effective from January 2025.
UK: Basel 3.1 implementation scheduled for January 2026.
US: Timelines currently remain uncertain.
Vincent highlighted the challenges SMBC faces as a Japanese-based global systemically important bank (G-SIB), operating across multiple jurisdictions with varying regulatory requirements. Charlie addressed the difficulties smaller banks face, particularly in securing resources and managing data under evolving regulations.

Key CRR III Components
The session explored significant updates under CRR III:

Credit Risk: Vincent outlined changes to the standardised and internal ratings-based approaches, noting key differences between the UK and EU frameworks, particularly regarding infrastructure lending and real estate.
Output Floor and Leverage Buffer: The panel explained the phased introduction of the output floor from 2025 to 2029, designed to limit risk-weighted assets calculated using internal models. They discussed how transitional provisions might affect banks’ balance sheets differently, even within the same jurisdiction.
The audience participated in a live poll about the expected timing of the output floor becoming a binding constraint, with results feeding into the panel discussion.

Operational Challenges
The panellists considered the operational challenges of complying with multi-speed regulatory implementations:

Resource Management: Balancing the need to prepare early with the risk of overcommitting resources.
Data Consistency: Ensuring consistent data standards across jurisdictions to avoid inefficiencies and duplication.
Charlie stressed the importance of strong project management and strategic planning to navigate these complexities.

Audience Questions and Closing Reflections
The webinar concluded with an insightful Q&A session. One question focused on the impact of the UK’s risk-sensitive approach on banks, prompting Vincent and Charlie to explore the operational and strategic implications.

In his closing remarks, David Hulmes summarised the key takeaways:

The importance of understanding jurisdictional differences in CRR III and Basel III implementation.
The challenges of managing multi-speed regulatory timelines while maintaining strategic alignment.
The critical role of data standardisation and technology in achieving compliance efficiently.
David thanked the panellists for their valuable contributions and invited attendees to join future Suade webinars, promising further exploration of the evolving regulatory landscape.