(Bloomberg) — The UK delayed its implementation of a significant update to international bank capital rules for a third time to allow for more clarity over its rollout in the US.
Most Read from Bloomberg
The Bank of England pushed the application of Basel 3.1 by one year to the start of 2027 citing “the current uncertainty around the timing” of the standards in the US. The decision also reflects “competitiveness and growth considerations” and was taken after consultations with HM Treasury, the BOE said in a statement on Friday.
The UK is the first major jurisdiction to announce a delay since the US election, which stoked speculation of a global deregulation wave under a Trump administration in Washington. The move is likely to embolden bank lobbyists in other countries as they push for the rules that dent their profitability to be weakened.
Banks around the world have argued that higher capital requirements would limit their ability to extend credit to companies and households. The stricter standards would also dent their reserves for shareholder dividends and stock buybacks.
After fierce lobbying by US banks, the Federal Reserve proposed changes to updated standards for the industry in September. Yet those revisions drew opposition from several regulatory officials, Bloomberg News has reported. Then came the election of Donald Trump and plans by Fed Vice Chair for Supervision Michael Barr to step down, raising questions about the future of the proposal.
The global capital reform package was agreed in 2017 as the last piece of the response to the global financial crisis. Some seven years later, the backdrop has changed and policymakers are increasingly speaking of the need to ensure regulation doesn’t hurt economic growth.
The European Union introduced most of the new rules this month but held off on the ones affecting banks’ trading business until 2026 and may delay further. Switzerland introduced all the rules in January.
European banks would be at a competitive disadvantage to US peers if that country doesn’t implement the update of the Basel standards, Heiner Herkenhoff, chief executive officer of the Association of German Banks, told reporters this week in Frankfurt. “Politicians and regulators should watch developments in the US, especially on Basel III, very closely and prepare to react,” he said.
Story continues
The BOE had earlier wanted to delay the implementation of the new capital rules until 2026, which was six months later than its previous deadline, an attempt to put it on track to adopt the package at roughly the same time as other international jurisdictions.
The UK has said its implementation will have a minimal impact on banks’ capital overall, but individual banks predict a significant impact on some activities. The big UK banks also feared the logistical hassle of implementing on different schedules in different major markets and so are keen for the UK to match the US time-line.
(Updates with details of other jurisdictions starting in third paragraph.)
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.