Basel Committee Tightens G‑SIB Measurements to Curb 'Window Dressing', Raises Disclosure Cutoff

The Basel Committee on Banking Supervision has tightened the way the world’s biggest banks are measured for systemic importance, seeking to stop firms from trimming positions around reporting dates to make themselves look less risky. Japan’s Financial Services Agency highlighted the move in a notice published Friday, drawing attention to both the finalized anti-window-dressing standard and a separate Basel consultation that is open for comment until Jan. 14, 2027.

The change matters because the Basel Committee’s global systemically important bank, or G-SIB, framework is used to identify the banks whose distress would pose the biggest risk to the financial system. A bank’s score helps determine its bucket in the framework and, in turn, the extra loss-absorbing capital it must hold.

The Basel Committee, which sets global banking standards and is hosted by the Bank for International Settlements, published two documents on Oct. 16: a final standard titled “Global systemically important banks – revised assessment framework to address window dressing” and a consultative paper titled “Global systemically important banks – methodology review.” In a media release, the committee said, “Window dressing seeks to temporarily reduce banks' perceived systemic footprint around the reference dates used for the reporting and public disclosure of G‑SIB scores. As noted previously by the Committee, window-dressing by banks is unacceptable.”

Under the final rules, all banks will have to calculate stock G-SIB indicators using the average of quarter-end values over the financial year, instead of relying on a single year-end snapshot. The standards document says, “The final standard requires, at a minimum, all banks to calculate the value of stock G‑SIB indicators based on the average of quarter‑end values over the financial year.”

For banks that are already designated as G-SIBs, and for those close to the cutoff, some indicators will have to be averaged more frequently than quarter-end, including monthly averages and, for some items, daily averages. National regulators may go further and require even more frequent reporting in their own jurisdictions.

The Basel Committee also raised the threshold for which banks must submit the full set of G-SIB data and publicly disclose the framework’s 13 indicators. That cutoff will increase to 350 billion euros in leverage-ratio exposure from 200 billion euros. In practice, that means fewer banks may need to file the full data template and public disclosure forms, even as the reporting for the largest and near-threshold firms becomes harder to game.

The threshold increase takes effect on Jan. 1, 2027, and will apply operationally to the end-2026 assessment exercise using end-2025 data for the threshold test. The rest of the anti-window-dressing package will be phased in more slowly. From Jan. 1, 2028, banks are asked to provide higher-frequency data on a best-efforts basis for the end-2028 assessment. From Jan. 1, 2029, that higher-frequency reporting becomes mandatory for the assessment published in 2030. The full framework, including the averaging changes aimed at curbing window dressing, has an implementation date of Jan. 1, 2030. During the transition, supervisors are told to use judgment if material differences emerge.

The separate consultation published by Basel is part of its periodic review of the G-SIB methodology. One issue under review is whether to formalize the committee’s 2022 treatment for banks headquartered in the European Banking Union, using a parallel score that recognizes 66% of the score reduction that would result from treating intra-EBU exposures as domestic. Japan’s Financial Services Agency said comments should be submitted in English to the Basel Committee by Jan. 14, 2027. The consultation says responses will be published on the BIS website unless respondents request confidentiality.