The Prudential Regulation Authority (PRA) has announced it has decided to delay the introduction of Basel 3.1 in the UK by one year until 1 January 2027.
The banking reforms were in response to the 2008 financial crisis and were created to improve the way banks measure risk and standardise approaches between firms to make their capital ratios more consistent and comparable.
It also included changes to mortgage lending, such as amendments to the definition of residential real estate and property valuations.
The PRA, in consultation with the Treasury, agreed to push back its implementation to allow time for more clarity on plans to introduce Basel 3.1 rules in the US.
The regulator published the near-final rules in September last year and set a date of 28 February for banks to join the interim capital regime. This has now been moved back and the PRA will give a further update on this.
It said: “Given the current uncertainty around the timing of implementation of the Basel 3.1 standards in the US, and taking into account competitiveness and growth considerations, the PRA, having consulted with HM Treasury, has decided to further delay implementation of the rules.
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“We now expect to implement on 1 January 2027, but will continue to monitor developments. In line with the approach taken for the six-month delay in PS9/24, the transitional periods in the rules will be reduced to ensure the date of full implementation remains at 1 January 2030, as set out in the original proposals.”
Rahul Choudhary, director of risk at independent consultancy Broadstone, said: “The delay to Based 3.1 implementation until January 2027 gives banks more time to adapt and strategically prepare for the upcoming regulations.
“Moreover, the PRA notes that it will continue to monitor developments regarding the new planned implementation date suggesting the regulation could be further delayed.
“The delay aligns with the government’s strategy to drive growth across the UK’s financial services sector and suggests a desire to improve UK competitiveness in this area.”
