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Bank of England delays final Basel bank capital rules to July 2025

The Bank of England on Wednesday said it would delay by six months to July 2025 its roll out of the final leg of international bank capital rules that began after the global financial crisis over a decade ago.

The BoE’s Prudential Regulation Authority arm had indicated along with the European Union, that it would start implementing the rules, which were set out by the global Basel Committee of banking regulators, from January 2025.

Instead, the BoE has decided to move in line with the United States, where the Federal Reserve has said it would start its roll out in July 2025.

The BoE said this would give firms more time to get ready, and that it also intends to cut the transitional period for full implementation to 4.5 years to ensure full implementation by 1 January 2030.

UK Finance, a banking industry body, said its members were already dedicating huge amounts of resources to preparing for the new rules.

Typically banks need at least a year to prepare for implementing new rules once a final version has been published.

“With this in mind, we would urge the Prudential Regulation Authority to finalise its requirements by Easter 2024, rather than mid-Summer, to give firms the certainty they need to plan effectively,” said Simon Hills, UK Finance’s director for prudential policy.

The Bank has already held a public consultation on its proposals to implement the Basel rules and had been expected to issue final rules sometime in 2024.

It has now changed its timetable.

“In Q4 2023, we intend to publish the near-final policies on market risk, credit valuation adjustment risk, counterparty credit risk and operational risk,” it said in a statement.

“In Q2 2024, we intend to publish the near-final policies on the remaining elements… credit risk, the output floor, and reporting and disclosure requirements.”

Banks in Britain are pushing for changes to avoid being at a “competitive disadvantage” to banks in the European Union, where policymakers have agreed to temporary waivers and long phase-ins. U.S. banks are also pushing back against how the Fed intends to implement the so-called “Basel Endgame”.
Source: Reuters

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