The UK’s Prudential Regulation Authority (PRA) and Treasury Department have announced a decision to delay the implementation of Basel 3.1 in the UK by one year, until 1st January 2027.
The regulators say this allows more time for greater clarity to emerge about plans for its implementation in the US.
Basel 3.1 – or “Basel Endgame” as it is often referred to in the US – is the final set of international banking reforms designed in response to the 2008 global financial crisis. It is designed to improve banks’ own measurement of risk, standardising approaches between firms to make their capital ratios more consistent and comparable.
On 12 September 2024, the PRA published PS9/24 – Implementation of the Basel 3.1 standards near-final part 2, which set out its near-final rules to implement Basel 3.1 in the PRA rulebook. The publication delayed the implementation date by six months to 1 January 2026 based on consultation feedback and the PRA’s ongoing monitoring of the implementation timelines of other jurisdictions.
The PRA and UK Treasury say that given the “current uncertainty around the timing of implementation of the Basel 3.1 standards in the US,” and also taking into account “competitiveness and growth considerations,” the rules will now be implemented on 1st January 2027.
As part of the preparatory work to implement Basel 3.1, the PRA had indicated that it would conduct a firm data collection exercise to inform an off-cycle review of firm-specific Pillar 2 capital requirements so that they could be updated at the same time as the implementation of Basel 3.1 standards. The stated deadline for firms to submit the data for the collection exercise was 31 March 2025. In light of the delay to implementation, the regulator says it is immediately pausing this data collection exercise until further notice.
In light of the delay to implementation, the end-date of the time-window to join the Interim Capital Regime – previously set as 28 February 2025 – will also be moved back. The new date is yet to be announced.
Basel 3.1 has been vigorously opposed by many US banks and will likely be a focus for the upcoming Trump administration. In the EU, the implementation date for the new rules is still set at January 2026. The Commission has not commented on whether it will mirror the UK’s decision to delay.
