Exclusive-EU to delay bank rules as it waits for Trump's deregulation moves, sources say

By Francesco Canepa, Jan Strupczewski and Giuseppe Fonte

FRANKFURT(Reuters) -The European Union is set to delay new, global rules governing banks' trading again as it waits for more clarity about the U.S. administration's plans to deregulate its financial sector, sources told Reuters.

The Fundamental Review of the Trading Book (FRTB) is a key part the Basel III package devised in the wake of the global financial crisis but not yet implemented by Britain or the United States, two of the world's key financial centres.

Its adoption in the EU was already pushed back by a year to 2026 last year, when it became clear that the United States would not be able to adopt the rules by its original deadline.

The latest, one-year postponement to January 1, 2027 reflects pressure from European banks fearing they will find themselves at a disadvantage to their U.S. and UK rivals, five senior officials at European and national institutions said.

A senior EU source said European Commissioner Maria Luís Albuquerque informed the bloc's finance ministers about the delay at a meeting on May 13.

The European Commission had said it would make a decision on whether or not to postpone the FRTB by the end of June after consulting with the industry and its supervisors.

The FRTB governs capital and reporting requirements relating to banks' trading assets, crucially including how risk should be measured using a standard method or banks' own calculations.

The United States has stalled the introduction of the entire Basel III package and U.S. President Donald Trump's administration signalled it might even relax some of the existing rules, in what would mark a U-turn from the push for more controls that followed the 2007-2009 financial crisis.

European banks have urged the EU to refrain from imposing new burdens that their competitors overseas do not face.

"It now looks as if this set of rules will not exist in the U.S. and we know that Brussels is looking at this carefully," Commerzbank's chief executive Bettina Orlopp said at a conference on Monday. "We have to be careful that we maintain the international competitiveness of European banks."

The European Central Bank, the EU's top banking watchdog and for a long time a staunch defender of a timely implementation of Basel III, proposed a compromise earlier this month.

It envisaged a one-year delay to rules applied to banks' internal risk models, while those concerning the one-size-fits-all, "standardised approach" would be phased in over three years starting in 2026.

Some governments have also weighed in, with French President Emmanuel Macron calling for a "synchronisation" on financial rules between the EU, the United States and Britain.

Britain earlier this year pushed back its Basel III implementation to 2027 while Washington has yet to unveil a timeline.

In contrast, the EU has already implemented most of the Basel III package, which took effect this year. China, Japan and Canada have done so long ago.

In March, the European Commission launched a consultation, asking banks and supervisors if they thought the FRTB should go live next year, be delayed by 12 months or tweaked to align it more with draft U.S. and UK rules.

The European Banking Federation, an industry body, said member banks that were exposed to U.S. and British competition favoured a one-year delay.

The International Swaps and Derivatives Association, a global lobby, said "a clear majority" of its own members also favoured a delay, although a minority preferred that the FRTB took effect next year to avoid running both new and old rules at once.

(Additional reporting by Tom Sims in Frankfurt, Leigh Thomas in Paris and Valentina Za in MilanEditing by Tomasz Janowski)