The Basel Committee finalised changes requiring banks to average systemic-risk indicators across the year, reducing the benefit of temporarily shrinking exposures at year-end. The revised approach will measure systemic importance using exposures maintained throughout the reporting period, with potential implications for capital surcharges.

At individual banks, capital composition and supervisory assessments were also in focus. Yes Bank disclosed an indicative reduction in its common equity Tier 1 ratio following the Supreme Court’s AT1 ruling, while Nordea paused share buybacks pending clarity on the capital impact of a European Central Bank model review.

Read more on the week’s key developments:

1. Basel replaces year-end snapshots with averaged G-SIB assessment indicators

The Basel Committee on Banking Supervision finalised changes on 16 October requiring banks in the global systemically important bank (G-SIB) assessment to average stock indicators across the reporting year. Quarter-end averaging is the minimum. G-SIBs and banks scoring 100 basis points or above in the previous assessment must use higher frequencies for specified measures, including daily over-the-counter derivatives notionals. A transition starts in January 2028, with year-end figures and best-efforts averaged figures reported for the assessment published in 2029. The revised assessment begins in 2030 using 2029 data.

Briefly shrinking positions at year-end would bring less benefit to a bank’s systemic score. Treasury and reporting teams will need reliable intra-year exposure data, while surcharge effects will vary with banks’ relative scores. Higher surcharges resulting from the 2030 assessment would ordinarily apply from January 2032; reductions may receive different treatment. Separately, the reporting threshold rises to EUR 350 billion ($393.9 billion) in January 2027. This changes the reporting perimeter, not the threshold for G-SIB designation.

2. Yes Bank flags potential CET1 fall to 11.4% after AT1 ruling

Yes Bank’s 17 October results showed a reported September-end common equity Tier 1 (CET1) ratio of 13.7% and an indicative, unaudited pro forma ratio of 11.4%, a difference of 230 basis points. On 15 October, India’s Supreme Court upheld the invalidation of the bank’s 2020 write-down of INR 84.15 billion ($886.2 million) in additional Tier 1 (AT1) bonds. Reuters reported that its total capital adequacy ratio would remain at 14.5% on the pro forma basis. No judgment-related adjustment was recognised in the quarterly accounts.

Restoring AT1 principal could reverse the common-equity benefit of the write-down while reinstating instruments in a separate capital tier, subject to accounting and regulatory treatment. Banks must meet separate CET1 requirements, so an unchanged total capital ratio would not eliminate implications for lending and distributions. The illustration turns reported profit of INR 10.8 billion ($113.7 million) into a pro forma loss of INR 52.2 billion ($549.7 million). Yes Bank was assessing implementation, financial consequences and legal remedies; the estimates remain subject to revision.

3. IMF stress test places banks holding 22% of sample assets below its capital threshold

The International Monetary Fund’s Global Financial Stability Report, released on 13 October, estimated that banks’ aggregate common equity Tier 1 (CET1) ratio would fall about 150 basis points to 11.5% under its adverse scenario. The test covered 665 banks in 29 countries, representing more than 70% of global banking assets. Banks holding 22% of sample assets were classified as weak, with post-stress CET1 below 7% plus any applicable G-SIB buffer. The scenario combined energy disruption, rising bond yields and weaker-than-expected gains from artificial intelligence.

The weak-bank share was 18% in the 2025 test, but the harsher 2026 scenario and broadly unchanged starting capital mean the difference does not establish worsening actual capital positions. Higher sovereign yields generated valuation losses at some large North American banks, while energy-importing Asian economies suffered greater credit losses. A separate sensitivity analysis combining 20% credit losses on US banks’ private-asset exposures with full drawdown of committed facilities and higher risk weights reduced aggregate CET1 by about two percentage points. The IMF warned that such stress could be amplified during a wider downturn.

4. Nordea pauses buybacks as ECB model review points to higher risk weights

Nordea said on 15 October that it had paused share buybacks until the capital impact of the European Central Bank’s review of its internal ratings-based models for non-retail lending became clearer. Supervisory discussions pointed to more conservative calculations and higher risk exposure amounts (REA), with no decision expected before 2027. Nordea’s September-end CET1 ratio was 15.8%, or 1.9 percentage points above its regulatory requirement. It included interim profit after a 70% dividend deduction, subject to ECB approval.

Nordea’s capital policy maintains a 150-basis-point management buffer above the regulatory requirement. Using rounded reported figures, headroom above that buffer was about 40 basis points, helping explain the decision to preserve capital ahead of prospective higher risk weights. An REA increase can reduce CET1 even when underlying loans and credit quality are unchanged; Nordea said the affected portfolios had not deteriorated. The supervisory adjustment remains unquantified, and its size will influence when buybacks can resume.

5. Swiss committee backs liquidity backstop with upfront fee applying to UBS

Switzerland’s Council of States economic affairs committee backed a public liquidity backstop for systemically important banks on 13 October, reviving legislation paused during wider too-big-to-fail reforms. By seven votes to five, it proposed limiting an upfront availability fee to banks with substantial international operations, currently only UBS. The assessment base would include bail-in debt, collateral pre-positioned at foreign central banks and certain long-term funding instruments. The committee also recommended a statutory maximum assessment rate of one basis point.

The backstop would provide government-guaranteed Swiss National Bank liquidity during restructuring, once a bank’s own liquidity and eligible collateral were exhausted. For UBS, the upfront fee would add to contingency liquidity costs, with the proposed assessment base incorporating other funding and loss-absorption resources. The committee approved the overall bill by nine votes to none, with three abstentions, but parliamentary approval remains outstanding. Paying the fee would not guarantee access to support, and the proposal creates no immediate liquidity facility or capital requirement.

6. Wells Fargo CET1 falls as rate-driven valuation changes reduce capital

Wells Fargo reported on 13 October that its standardised common equity Tier 1 (CET1) ratio fell to 10% at September-end from 10.3% in June. Higher interest rates depressed securities valuations, reducing accumulated other comprehensive income and exerting 38 basis points of downward pressure on the CET1 ratio. This exceeded the net 30-basis-point decline, indicating that other capital movements partly offset the effect. The bank also recorded $1.029 billion in credit-loss provisions, against $914 million in the preceding quarter.

The distinction matters for capital planning. Valuation movements affect recognised capital before securities are sold, while provisions reduce earnings available to rebuild it. Wells Fargo remained 1.5 percentage points above its stated 8.5% CET1 requirement, including buffers. During the quarter, it repurchased $2.5 billion in common shares and paid $1.5 billion in common dividends.

7. Goldman Sachs CET1 falls as risk-weighted assets expand

Goldman Sachs reported on 13 October that its standardised common equity Tier 1 (CET1) ratio declined to 12.4% at September-end from 12.9% in June. Standardised risk-weighted assets rose to $817 billion from $791 billion, while CET1 capital was almost unchanged at $101.4 billion against $101.7 billion. Its advanced-approach CET1 ratio remained at 13.6%. Trading assets rose to $832 billion from $789 billion and loans to $276 billion from $261 billion.

The decline primarily reflects growth in the ratio’s denominator, with risk-weighted assets expanding while common equity remained broadly stable. This narrows headroom without implying equivalent realised credit losses. Goldman Sachs returned $4.49 billion to shareholders during the quarter, including $3 billion in share buybacks, against net earnings of $5.29 billion. Its standardised CET1 requirement was 11.4%, leaving approximately 100 basis points of headroom. The firm described its capital and risk-weighted asset figures as preliminary estimates.

8. Bank of America records $1.2 billion compliance settlement charge

Bank of America reported a $1.2 billion non-tax-deductible settlement charge on 14 October. Third-quarter net income was $6.9 billion, compared with adjusted net income of $8.1 billion excluding the charge. The previous day, the Financial Crimes Enforcement Network (FinCEN) imposed a $1.2 billion anti-money laundering penalty, crediting the $750 million penalty assessed by the Office of the Comptroller of the Currency. The Office of Foreign Assets Control separately announced an $11.6 million sanctions settlement.

FinCEN cited failures to report more than $5 billion in suspicious transactions promptly, alongside weaknesses in transaction monitoring and independent testing. The enforcement measures require a retrospective transaction review and independent assessments of monitoring and customer due diligence controls. The charge reduces quarterly earnings available for capital retention, while mandated lookbacks, system improvements and validation may bring continuing operating costs not quantified by the settlement figure.

9. ING and PGGM share credit risk on EUR 5 billion of project loans

ING and PGGM announced on 13 October a credit risk-sharing transaction referencing EUR 5 billion ($5.6 billion) of project-finance loans across Europe, the Middle East, Africa and Asia-Pacific. PGGM is a Dutch pension investment manager acting for PFZW, the Dutch healthcare and welfare pension fund. Most of the portfolio supported the energy transition. ING described it as its first large-scale significant risk transfer in project finance, designed to provide regulatory capital relief while allowing eligible new loans into the reference portfolio over time.

Loans remain on ING’s balance sheet while an agreed layer of losses is transferred to an investor, as the ECB explained in March. Regulatory capital relief depends on qualifying protection and retained risk; PFZW assumes contracted project credit exposure. The announcement did not disclose the protected tranche, premiums or capital released. The EUR 5 billion represents reference loans, not capital freed for new lending or the value of protection bought.

10. CPMI and IOSCO clarify resources for infrastructure business losses

The Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions (CPMI–IOSCO) issued final guidance on 14 October on financial market infrastructures’ (FMIs’) general business losses. A 2025 assessment identified gaps and material differences in implementing Principle 15, including the management of non-default losses and related resources. The report clarifies the minimum liquid net assets funded by equity that FMIs should hold against general business losses, separately from resources covering participant defaults.

The minimum is the greater of six months’ current operating expenses or estimated recovery and orderly wind-down costs, including extraordinary expenses. Equity alone does not establish whether readily usable liquidity is available when legal, operational or investment losses threaten critical services. FMI boards must assess residual risks and viable equity-replenishment arrangements, while banks and clearing members need transparency about potential cost allocations.