Basel IV and the butterfly effect: a lesson in unintended consequences

This white paper delves into the impact of Basel III/Basel IV on the banking industry, explaining the increase in regulatory capital, reduction of free capital and decrease in profitability. Highlighting the importance of technology in mitigating regulatory burdens and identifying paths to increased profitability, the paper provides historical context, best practices and an analysis of the effects on financial system stability. Furthermore, it emphasises the need for banks to design capital portfolio management frameworks that align with the new requirements.