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The Bank of England will delay implementing the latest package of global post-crisis banking reforms for another six months, aligning its approach with the US as officials wade through an avalanche of industry feedback.
The new rules, part of the broader Basel III reforms, are global policymakers’ final effort to insulate the banking industry against the excessive risk-taking that culminated in the financial crisis of 2007-08.
The package includes limiting banks’ ability to decide how much capital they need to back certain loans and trades — measures that generally increase banks’ costs, though the BoE has said that is not the objective.
The BoE is preparing to unveil a July 2025 implementation deadline in the coming weeks, in line with the July 2025 date announced by the US over the summer, several people briefed on the plans told the FT.
The rules were to set to come into force in January 2025, after years of delays from the initial target of January 2021.
The BoE declined to comment.
UK-based banks have pushed back against some of the BoE’s proposals that they say will put them at a disadvantage against the EU’s banks. EU policymakers have taken such an industry-friendly position that the ECB has warned their approach could give the damaging impression European banks were subject to lax regulation.
The UK’s Treasury, and some banks, had been told about the BoE’s plans, the people said. They added the BoE intended to shorten the five-year phase-in period by six months and to delay finalising certain rules.
While banks had pressed for the delay to avoid the logistical conundrum of staggered implementation across two major jurisdictions, the BoE’s believes the delay is independently justified because the UK’s original timelines had become very challenging.
The BoE had promised to produce “near-final” rules on its entire Basel package by the end of the year so that banks would have 12 months to prepare. Officials have privately told banks that the volume of consultation responses the BoE received made the target difficult to achieve.
The BoE now hopes to publish “near-final” rules on only the most complex markets and trading areas in December, with rules on everything else coming next May, people familiar with the matter said.
“Alignment with the US is helpful, but we think it’s possible the US will delay by a further six months — it’s an easy giveaway to say ‘we’re listening’ when there’s so much argument about the content,” said a senior policy executive at one of the UK’s biggest banks.
“The UK and EU should keep the flexibility to match to a further delay by the US,” they said, adding banks were “sad to see the phase-in drop by half a year or maybe — we always want longer to adjust”.
The new timeline puts the UK out of sync with the EU, which still has a January 2025 deadline. A senior EU regulator said the EU could still theoretically extend its implementation, but since the EU already had a longer phase-in period for the rules, it’s “not such a big deal”.
