EU considers Basel bank trading capital rule delay; Starling Bank reports 55% profit increase
The EU is considering plans to delay implementing key global bank capital rules by a year to avoid disadvantaging its lenders due to ongoing disputes over the standards in the US.
Originally scheduled to be come into effect from January 1 2025, the wider regulatory package, part of the Basel III finalisation agreed seven years ago, aims to prevent another financial crisis like that of 2008.
According to sources cited by Bloomberg, the delay will specifically affect rules governing banks’ trading activities, given their global nature. This comes as the US grapples with its version of the “Basel III Endgame”, with no implementation expected before mid-next year. The UK has targeted mid-2025 for its start date for the rules.
While the wider package is still set for a January start, the European Commission can delay implementing rules on banks’ trading businesses, part of its broader capital requirements package, without needing further approval from the European parliament or governments. These so-called “market risk” rules, which apply to banks’ trading businesses, contribute 1.1 percentage points to the EU’s overall finalised Basel III 9.9 per cent capital increase.
The EU’s potential delay, which Bloomberg’s sources say is still under consideration, has been driven by concerns that moving first could place European banks at a competitive disadvantage. Regulators, including European Banking Authority chair Jose Manuel Campa, have urged the EU to adhere to its original schedule despite potential delays in the US.
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UK digital lender Starling Bank has announced a year-on-year pre-tax profit increase of nearly 55 per cent to £301mn for the year ending March 31. Interim CEO John Mountain attributed the strong performance to higher interest rates, which boosted net interest income to approximately £593mn from £349mn the previous year.
Starling, which heavily utilised UK government-backed schemes during the Covid-19 pandemic to expand its loan book, additionally noted rising mortgage arrears and higher default rates among small and medium-sized enterprises among its customer base during the past year. Accordingly, it has increased its bad loan provisions to £13.9mn, a 40 per cent rise from the previous year.
The results represent the third consecutive year of positive earnings for Starling. Its UK rival Monzo reported its first annual profit last week.
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Former NatWest chief executive Alison Rose has joined private equity firm Charterhouse as a senior adviser, her first role since leaving the UK retail bank following the “debanking” scandal involving Nigel Farage.
Rose, a prominent UK business leader, stepped down from NatWest last July amid the fallout over Farage’s account closure at NatWest’s private bank, Coutts.
Rose forfeited £7.6mn in potential pay and bonuses upon her departure, though she remained entitled to her 2023 salary, pension, and fixed-pay share allowance, totalling £1.75mn for her notice period. An independent review found the decision to close Farage’s account was lawful but poorly communicated.
Charterhouse, with roots dating back to 1934 and around €5bn in assets under management, focuses on European mid-market companies. Rose’s appointment was first reported by Private Equity News.
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ING Bank is planning to set up its new investment banking unit’s European headquarters in Madrid, according to Spanish daily Cinco Días.
The Dutch lender, which has been operating in Spain since 1999, has shifted its focus in recent years on growing its corporate banking revenues, which rose by 21 per cent to €208mn in 2023.
According to Cinco Días, the business unit is expected to start operating by late 2023 or early 2024. ING is finalising details and has begun recruiting for roles such as vice-presidents, associates and analysts, the newspaper added.
