BoE delays Basel rule on banks' trading to 2028, eases capital burden on midsize banks

Zawya

15-07-2025

LONDON - Britain's central bank on Tuesday delayed implementing a key part of new, global rules governing banks' trading activities by a year to 2028, as it waits for clarity on what other jurisdictions including the United States will do.
As part of a series of changes, the Bank of England also announced an easing of capital requirements for mid-sized banks. That move had been expected, although some lenders were hoping for a more generous adjustment.
The announcements follow calls from the Labour government for regulators to shift away from a risk-averse stance and towards one that supports financial sector growth, and come as supervisors elsewhere delay the full implementation of banking reforms known as Basel 3.1.
The Bank of England had already delayed the broader Basel rules by a year to January 2027, extending the timeline to give firms more time to adjust and to get a better understanding of what the United States would do under Donald Trump as president.
While the BoE said it would postpone the implementation of the internal models approach under the Fundamental Review of the Trading Book (FRTB) by one year to January 2028, it would stick with a January 2027 implementation date for the rest of the Basel 3.1 rules.
"Today's announcements will give certainty to firms of all sizes about the future capital framework ... and allow an extra year for part of the implementation of new investment banking rules," Bank of England Deputy Governor Sam Woods said.
The FRTB governs capital and reporting requirements relating to banks' trading assets, crucially including how risk should be measured using a standard method or banks' own calculations.
The BoE said to give firms more time to prepare, and "given continued uncertainty over the timing of the implementation of the FRTB in some other jurisdictions", it was proposing delaying implementation of the new internal model approach to the FRTB.
Other jurisdictions have been postponing parts of the Basel rules implementation as they wait for U.S. plans to deregulate financial services and avoid burdening their own companies with extra rules before other countries have introduced them.
The EU is delaying FRTB implementation until 2027.
MID-SIZED BANKS
Separately, the BoE raised the minimum asset threshold at which banks must issue loss-absorbing debt known as MREL — designed to ensure banks can be "bailed in" rather than bailed out — to a range of 25 billion to 40 billion pounds ($53.73 billion), up from 15 billion to 25 billion pounds.
The new range is slightly more generous than the 20 billion to 30 billion pounds range proposed during a consultation last year.
Banks that have above 40 billion pounds in assets will be expected to prepare full bail-in plans, while those within the new band will be assessed on a case-by-case basis.
Mid-sized lenders such as OneSavings Bank and Metro Bank, long critical of the post-crisis rules as disproportionately punitive, are among those expected to benefit.
Paragon Banking Group Chief Executive Nigel Terrington welcomed the BoE's increase to the MREL capital requirement threshold, describing it as a "strong step in harnessing the full potential of this sector." ($1 = 0.7444 pounds)
(Writing by Sam Tabahriti; Additional reporting by Sachin Ravikumar; Editing by Tommy Reggiori Wilkes and Kim Coghill)