Following the lead of the United States, the UK will postpone bank capital reform until at least 2026

Following the lead of the United States, the UK will postpone bank capital reform until at least 2026

2024-08-30 07:42:26

Source: Financial Times

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Britain’s top financial regulator is set to delay the next wave of bank capital reforms, people familiar with the matter said, as major global financial regulators abandon their original timetables and wait for the United States to make an implementation decision first.

The Bank of England will announce in the coming days a delay to its entire reform plan until January 2026 at the earliest, while keeping an eye on international developments, the unnamed sources said.

A Bank of England representative declined to comment. The Bank of England’s Prudential Regulation Authority announced on Thursday that it would publish a second and final set of reforms on Sept. 12, without providing further details.

Global regulators finalized the Basel III post-crisis reform plan as early as 2017, initially promising to implement it by January 2022. Later, due to the outbreak of the new crown epidemic, the timetable was postponed by one year, and the implementation in major regions such as the European Union and the United Kingdom became later.

The issue has become a political flashpoint in the United States, with banks threatening to sue regulators over initial proposals to increase capital requirements by 16%. Regulators have spent months trying to agree on a revised version of the Basel III final phase of reforms, which have yet to be released.

The United States is widely expected to change its plan to implement the new rules in June 2025, as banks say they need at least 12 months’ notice to prepare for the changes.

The slow pace of the United States has already prompted the European Union to announce in June that it would delay a key part of its reform package until January 2026, so that EU banks would not be at a disadvantage to Wall Street banks. Canada implemented new rules in 2024, but announced last month that it would postpone one of the measures so that regulators “have time to consider the implementation timetable of the 2017 Basel III reform package in other regions.”

Britain has decided to delay the entire plan because the country’s early general election announced in mid-May meant that regulators were forced into a “quiet period”, which prevented them from publishing detailed rules in time and giving banks a full year to prepare.