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Bank of England consults on remaining Basel bank capital rules
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LONDON (Reuters) – The Bank of England confirmed on Wednesday that the rollout of remaining global bank capital rules would start in January 2025, with smaller lenders not required to apply them.
LONDON (Reuters) – The Bank of England confirmed on Wednesday that the rollout of remaining global bank capital rules would start in January 2025, with smaller lenders not required to apply them.
Known as Basel III, the rules were agreed globally after taxpayers had to bail out undercapitalised lenders in the global financial crisis over a decade ago.
The BoE said it does not expected its proposals to implement the remaining Basel rules to “significantly increase overall capital requirements on average across UK firms”.
“Alignment with strong international banking standards promotes economic growth by underpinning the competitiveness of the UK as a financial centre,” BoE Deputy Governor Sam Woods said in a statement.
“Our proposals for implementing the latest Basel standards, with appropriate but limited adjustments for the UK market, aim to deliver these goals.”
This contrasts with the European Union where several, albeit temporary, deviations from Basel are being proposed for the same start date as Britain.
The Bank proposed introducing the changes on January 1, 2025 – two years later than agreed globally – with transitional arrangements that give firms significant time to adjust to the new framework.
The BoE had already set out separate plans for a “strong and simple” capital regime for Britain’s smaller banks, and on Wednesday said these were being revised.
It proposed that banks who comply with the new simpler regime criteria would not have to apply the remaining Basel III rules for calculating capital buffers.
The Bank intends to consult in early 2023 on the first batch of measures that will apply to banks that come under the simpler regime.
(Reporting by Huw Jones, editing by Andy Bruce)
Basel III is a global regulatory framework established to strengthen the regulation, supervision, and risk management within the banking sector, particularly focusing on capital requirements and liquidity.
Capital requirements are regulations that require banks to hold a certain amount of capital reserves to cover potential losses, ensuring financial stability and protecting depositors.
The Bank of England is the central bank of the United Kingdom, responsible for monetary policy, issuing currency, and maintaining financial stability in the economy.
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, leading to a loss of confidence and potential economic downturn.
Economic growth refers to an increase in the production of goods and services in an economy over a period, typically measured by the rise in Gross Domestic Product (GDP).
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