The UK's Prudential Regulation Authority has postponed the implementation of Basel 3.1 standards to July 2025, originally set for January 2025. This six-month delay provides banks with additional time to comply with these complex requirements, avoiding competitive disadvantages against key jurisdictions like the US, which is revising its own capital rules. However, this postponement places the UK regulatory framework out of sync with the EU, which implemented Basel reforms on January 1, enhancing the competitive edge for UK banks in terms of credit insurance for the next two years. Furthermore, Basel 3.1 aims to tighten global banking capitalization to enhance safety.
In an industry where timing is everything, the UK's decision to delay Basel 3.1 implementation until July 2025 has sparked significant debate across the banking sector.
The PRA's decision allows banks more time to adjust to the requirements of Basel 3.1, while also safeguarding against competitive disadvantages in line with major jurisdictions.
This delay keeps the UK out of step with the EU's timeline, which has already implemented Basel reforms beginning January 1 this year.
The new Basel 3.1 framework aims to enforce stricter capital requirements and limit the use of internal models for risk weighting, addressing critical past shortcomings.
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