UK to Delay Bank Capital Reforms Until at Least January 2026
(Bloomberg) -- The UK’s top financial regulator is set to delay the next wave of bank capital reforms, according to people with knowledge of the situation, the latest example of a major global rulemaker abandoning its timetable for the changes until the US finalizes its package.
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The Bank of England is poised to announce in coming days that it will postpone its entire package until January 2026 at the earliest as it monitors international developments, the people said, asking not to be identified discussing information that isn’t public.
A BOE representative declined to comment. The BOE’s Prudential Regulation Authority announced Thursday that it “will publish its second and last set of near-final” rules on Sept. 12, without offering more details.
Regulators around the world hammered out the final stage of Basel III post-crisis reforms back in 2017, and originally pledged to implement them by January 2022. The global time line was delayed by a year because of the Covid-19 pandemic, and implementation has slipped further in major jurisdictions, including the UK, EU and US.
The issue has become a political flash point in the US, with banks threatening to sue their regulators over original proposals that would have increased system-wide capital requirements by 16%. Regulators have spent months trying to agree on revised proposals for their so-called Basel III Endgame, but have so far not presented them.
The delays mean that the US is widely expected to shift its June 2025 timetable for implementing the new rules, since banks say they need at least 12 months’ notice to prepare for the changes.
The US impasse has already prompted the EU’s announcement in June that it would postpone a key part of its package until January 2026 so that its banks will not be at a disadvantage to Wall Street’s. Canada, which implemented the rules in 2024, last month announced a delay to one of its measures to give regulators “time to consider the implementation time line of the Basel III 2017 reforms in other jurisdictions.”
The delays in the world’s biggest banking jurisdictions to measures designed to make bank capital harder to game come as the political pendulum swings from constraining banks’ risks toward using lenders to fuel global economic growth.
The UK has decided to delay the entire package because the calling of a general election in mid-May meant that regulators were forced into a “quiet period” that left them unable to publish their detailed rules in time to give banks a full year’s notice of the changes, the people said. The BOE announced some of its plans in December 2023 and had hoped to announce the remainder by the end of June.
The BOE already pushed out its timetable to align with the June 2025 schedule announced by the US in 2023.
The EU has deferred only the portion that deals with banks’ trading businesses, where markets are truly global and banks would be hurt the most by an uneven playing field. Switzerland is sticking with a January 2025 implementation despite protests from its banks, while Japan introduced the rules in March 2024.
(Updates with BOE announcement in third paragraph.)
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