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Basel 3.1 Overview - TONIC

Tonic’s Basel 3.1 Overview page offers insights into the practicality of Basel 3.1 implementation and details of Tonic's approach, which allows banks to streamline implementation and become compliant with upcoming phases of Basel 3.1.

Key Timelines

Scope Summary

See below for a breakdown of the Basel 3.1 regulatory go-live dates across key jurisdictions

There are several key areas of complexity to note:

  There is a discrepancy between go-live dates for key jurisdictions e.g. US – July 2025, EU – Jan 2025

•   The majority of jurisdictions have opted for a transitional phased approach per jurisdiction, between 3-5 years 

•   There are differences in regulatory scope per jurisdiction and differences in transitional go-live scope per jurisdiction

Basel 3.1 Regulatory Go-Live Dates Across Key Jurisdictions

Financial Impact - Central Resource Management


  A Central Resource Management Function will be critical to the successful management of the balance sheet, acting as the 'guardian' of capital and funding requirements, including resource optimization 

•   This function will be first line of defence on capital and have the right levels of transactions approval, in-line with risk appetite and policy 

•   Resource Management will be tasked with capital optimization, funding and collateral optimization for Trading & Sales desks, within constraints across balance sheet, ESG, operational and risk, to drive client revenue.

Central Resource Management Stages

1. Strategy:

Support the business in allocating capital efficiently in a transparent framework, accounting for output floor, leverage ratio and risk-based capital, while launching a pro-business initiative that supports sustainable growth. 

2. Capital Allocation:

Banks must have an efficient use and deployment of capital (asset allocation/rebalancing) to adhere to Basel 3.1.

3. Portfolio Composition:

Banks with significant RWA impacts and concentrated business models will need to optimize their business and balance sheets. 

4. Risk Appetite:

Basel 3.1 rules will trigger concerns around strategies on increasing risky behavior to generate EVA, promoting shadow banking and imposing constraints in credit availability.

5. Performance Measurement:

Where low risk and low returns business is hit by RWA weighting floors, banks will need to identify possibilities to increase profitability by adjusting prices. 

6. ROC Improvement:

Where this is not possible and the cost of meeting regulatory hurdles and risks makes the business unprofitable, the bank will need to look to move low grade assets and risks off the balance sheet and rescue the amount of regulatory capital they need to hold to cover the risks.

Tonic Basel 3.1 Services


  Due to the high complexity and wide scope of the Basel 3.1 changes, in-scope firms must start their readiness programme early

•   Firms will need to define and implement a front-to-back, tailored Target Operating Model (TOM), encompassing all regulatory and business changes, across a variety of technology, data, process and people solutions

•   Delivering a scalable, future-proofed operating model will be a priority for many firms, to avoid costly, tactical solutions

Tonic Services

  Tonic provides end-to-end Basel 3.1 transformation services, to accelerate and protect regulatory compliance for our clients

•   We provide a suite of modular high-quality programme management, analysis, TOM definition and implementation services

•   TonicX, our expertise-led transformation methodology, provides a high-quality, structured approach to accelerate transformation, tailored per client to maximise execution success

Next Steps

Get in touch below if you would like an informal chat about how our service proposals can help your firm accelerate a high-quality Basel 3.1 implementation.

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