Bank of England to ease rules for smaller and mid-sized banks
The Bank said its Prudential Regulation Authority (PRA) has pushed back the start of a new internal model approach for considering risk in the market by a year to January 1 2028.
It said the latest proposals will allow time 'for greater clarity to emerge in other jurisdictions' amid uncertainty how President Trump will implement the global Basel rules in the US.
It comes amid calls from Chancellor Rachel Reeves for reduced restrictions in the sector (Anthony Devlin/PA)
The Basel 3 regime was first drawn up in the aftermath of the financial crisis to increase the amount of equity available to absorb stress from banks in an effort to avoid future state bailouts.
The Bank of England said it will continue with plans to launch the majority of its modified Basel 3.1 rules at the start of 2027.
It had previously delayed the start by a year in the face of uncertainty in the global financial markets.
Basel 3.1 is set to promote 'banking resilience', according to the PRA, but comes as the Chancellor seeks reduce regulation in a bid to drive growth.
On Tuesday, the Bank said it would also change restrictions it claims will drive growth opportunities among smaller and mid-sized banks.
It will push forward with its 'strong and simple framework', which will reduce capital rules for smaller non-systemic banks and building societies, providing them with simpler restrictions than the largest UK banks.
The PRA said it is also putting forward prospective plans to make it easier for mid-sized banks to compete in the mortgage market.
It will publish a paper this summer with options to help-mid-sized banks grow by adjusting some barriers to securing permissions in providing residential mortgages.
Sam Woods, chief executive of the PRA and deputy governor for prudential regulation at the Bank, said: 'Today's announcements will give certainty to firms of all sizes about the future capital framework, bring in a simpler regime for smaller banks, make it easier for mid-sized banks to scale up in the mortgage market, and allow an extra year for part of the implementation of new investment banking rules.'
Dave Ramsden, deputy governor for markets and banking at the Bank, said: 'We have considered and reflected industry feedback in today's announcements.
'These changes are designed to foster growth and competition, recognising that smaller firms present lower risks to financial stability, whilst also maintaining size-appropriate resolvability capabilities.'
The rule changes come ahead of the Chancellor's Mansion House speech to financial industry bosses, where she is expected to launch further cuts of industry red tape.
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