EU Delays Key Part of Basel Reforms

The European Union (EU) will postpone a key component of global reforms to bank capital rules by one year to ensure the US’ delay will not disadvantage European banks, FT reports.

In response to signs that US regulators will miss the July 2025 deadline for implementing Basel Endgame rules, the “fundamental review of the trading book” (FRTB) will be delayed.

The European Commission will now release FRTB, which addresses how banks manage market risks in their trading books, in January 2026 instead of January 2025.

EU financial services commissioner Mairead McGuiness said the delay was necessary to ensure that the implementation of Basel rules remains fair for European banks.

Large European lenders have previously pushed for a delay of the rules, arguing that enforcing stricter capital requirements would place them at a disadvantage to American and UK banks.

McGuinness said:  “Essentially, it’s down to a level playing field. We have decided, given all of the evidence and delays elsewhere, to postpone the market risk rules.”

The US had intended to implement its version of the Basel Endgame rules by July 2025 but has faced criticism from banks and trade associations in response to the initial proposal.

The American Bankers Association and Bank Policy Institute (BPI) argued that the proposed capital requirements for banks would negatively affect banks’ ability to serve their communities.

BPI further criticized the Basel III proposal for “violating the law” and assigning risk weights to bank assets and exposures based on no data or analysis.

While the National Bankers Association warned the proposed reforms could negatively impact the cost of banking services for Americans, particularly those in underserved communities.

McGuiness added that the remaining Basel changes are set for implementation as scheduled.