Navigating the complex world of Basel IV
At asqin, we translate challenges into opportunities and help financial organizations grow through smart strategies and robust risk management.
The Situation
Basel IV marks a significant shift in financial sector regulation. Since the publication of the revised rules by the Basel Committee in December 2017, banks face new capital treatment, risk management and compliance requirements. With the implementation of Basel IV in 2025 through CRR III and CRD IV, banks face stricter rules that impact their capital requirements and risk management strategies. At asqin, we understand how these changes impact and help organizations stay ahead.
What will change with Basel IV?
- Stricter capital requirements: Basel IV introduces new rules for calculating credit risk, with higher risk weights for assets such as mortgages and commercial real estate. This means banks must hold more capital to meet the new requirements. Our experts will help you integrate these changes and optimize your capital strategies.
- Revision of Internal Models: Revisions to the Internal Ratings-Based (IRB) approach under Basel IV aim to provide a more consistent and comparable calculation of credit risk. This may lead to higher capital requirements for some banks. At asqin, we support you in modifying internal models and ensure that your models comply with the new standards.
- Operational risk: Basel IV replaces existing approaches to operational risk with a new, standardized approach. This makes capital requirements more risk-sensitive. Our specialists help you implement this new approach and ensure better alignment with your operational risk profile.
- Market Risk: The revised market risk rules of Basel IV introduce more risk-sensitive measures for trading and banking books. We provide insight and strategies to effectively manage your market risk and adapt your trading strategies to the new standards.
- Output floor: Basel IV sets a minimum level for capital requirements, which prevents capital requirements under the structured approach from becoming too low. Our consultants will help you navigate this requirement and ensure that your capital requirements are calculated consistently and effectively.
The impact on your organization
The introduction of Basel IV will force banks to increase their capital requirements and revise their risk management strategies. These changes may lead to higher costs and adjusted prices for products and services and thus have an (indirect) impact on buy-side parties. At asqin, we help you not only stay compliant, but also leverage these changes as opportunities for optimization and growth.
Our expertise in risk management and compliance allows us to guide your organization through the complexities of Basel IV. We ensure you are well prepared for the coming changes and help you achieve your strategic goals in an ever-changing market environment.