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EU postponed capital rules for banks
The European Union accepted temporary changes in FRTB rules under Basel III, postponing banks' new market risk capital requirements for three years...
The European Commission accepted temporary changes in the FRTB rules aimed at more accurately measuring risks arising from banks' trading activities. With the decision, the implementation of new capital requirements related to banks' market risks was postponed for three years.
The Commission announced that this step was taken to ensure that the EU banking sector can compete on equal terms with its international competitors. It was reported that the temporary changes will be valid for three years starting from January 1, 2027.
What do the rules change?
FRTB, part of the Basel III framework, requires banks to allocate more capital for risks arising from trading activities. EU banks were originally supposed to fully implement these rules starting January 1, 2027.
The Commission's decision emphasized that the temporary regulation is targeted and time-limited. Officials stated that this does not mean abandoning adherence to Basel standards but is a step to maintain competitive balance in global financial markets.
Competition emphasis from Albuquerque
Maria Luis Albuquerque, the Commissioner responsible for Financial Services, said that European banks should be able to compete on the same ground as their international counterparts. Albuquerque expressed that the measures taken both maintain adherence to Basel standards and support a level playing field in global markets.
Albuquerque also noted that the temporary changes will provide banks with clearer visibility of their future and that developments in other important regions will be monitored during this process.
Impact of the US and UK
The EU's postponement decision was also influenced by the fact that regulations in the US, UK, and some other major financial centers have not yet come into effect. Therefore, the European Union opted for a temporary adaptation instead of starting implementation on the same date.
The prepared measures will come into effect unless objected to by the European Parliament or the EU Council. Thus, the new capital timetable in the banking sector will be applied within the determined framework if no political objections arise.
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