The Basel Committee for Banking Supervision has enacted rules and regulations in 1988 which had the goal of limiting business risks for banks and strengthening the entire banking system. The Committee started reviewing and updating these provisions again in 1999 in order to keep up with the increasing requirements and developments in the banking sector and published the provisions as the Basel-II Accord in June of 2004. In response, the European Union has enacted guidelines that have the goal of strengthening the stability of the international financial system by introducing an increased sensitivity to risk.

Basel II is based on three pillars that supplement each other. The three pillars represent the minimum capital requirements (Pillar 1) , supervisory review (Pillar 2) and market discipline (Pillar 3) .

The European Commission published two guidelines in June of 2006 (RL 2006/48/EG and RL 2006/49/EG) which have been mandatory for all member countries since January 1, 2007. These guidelines have transposed the new equity requirement into European Law.

In Austria, Basel II was complemented by an Austrian Banking Act Amendment and two ordinances of the Financial Market Authority, the Solvability Ordinance and the Disclosure Ordinance. Additional changes in the Austrian Banking Act and supervisory laws were announced in the Federal Law Gazette (Federal Law Gazette I. No. 141/2006), and most of them became effective as of January 1, 2007.

In September 2009 the Basel Committee agreed on the broad framework of a reform package (Basel III) and on December 16, 2010 the Basel III rules text was published.

The aim of this set of reform measures is to improve the banking sector’s stability and its ability to absorb shocks from financial and economic stress. Further objectives are the improvement of risk management and governance as well as the strengthening of bank’s transparency and disclosures.
During the transition period from 2013 onwards bank’s minimum capital ratios will gradually be stepped up and capital conservation buffers as well as a leverage ratio will be introduced. At the end of year 2019 Basel III will be fully implemented.