Brussels proposes one-year delay for Basel bank oversight rules
Bank - Photo © Roman Levin - Fotolia
(BRUSSELS) - The European Commission proposed Wednesday to postpone by one year application of the market risk prudential requirements of the Basel III international regulatory framework for banks.
The delegated act postpones until 1 January 2026 the date of application of one part the Basel III standards in the EU – the Fundamental Review of the Trading Book (FRTB). The FRTB incorporates more sophisticated risk measurement techniques that aim to align capital charges more closely to the actual risks banks are facing in their activities in capital markets.
The Commission says its ongoing monitoring of the implementation of the Basel standards in the rest of the world indicates that some major jurisdictions have yet to finalise their rules or communicate on their timelines for implementation.
So, "to preserve the global level playing field for internationally active European banks in respect to their trading activities", the EU executive has decided to postpone the entry into force of this part of the Basel III standards.
The Basel III standards will apply to all EU banks from 1 January 2025, with the exception of the market risk framework (provided the co-legislators do not object to the delegated act).
Mairead McGuinness, Commissioner for Financial Services, Financial S
tability and Capital Markets Union, said: "We are steadfast in our international commitment to financial stability", said Financial Services Commissioner Mairead McGuinness, confirming that Basel III international standards will apply in the EU from 1 January 2025.
"This will ensure a reliable and stable banking sector for EU citizens and companies: implementing the Basel III rules is in the EU interest." She added that the Commission would be working closely with the European Banking Authority and the supervisors "to provide banks with the necessary technical details for a consistent approach across Europe."
The delay of the application date of the FRTB rules by one year will give the Commission time "to assess the international developments and our next steps".
The delegated act is now subject to the scrutiny of the European Parliament and Council for a period of 3 months.
Banking Package (the Capital Requirements Regulation and the Capital Requirements Directive)