BREAKING NEWS – Bank of England delays implementation of Basel 3.1

This morning (17 January), the news broke that the Bank of England has delayed the implementation of Basel 3.1 while it waits to see how the US will implement the final Basel agreement.

Our initial thoughts…

The extra year to implement Basel 3.1 is welcome breathing room for banks, but the real story lies in the reasoning behind the Bank of England’s decision. Waiting to see what happens in the US signals the need for alignment, but it also provides early evidence of the UK’s pivot toward growth-focused regulation.

Should the US opt for a watered-down Basel 3.1, it’s quite possible the UK will follow suit to stay competitive.

Alignment with the US is a pragmatic move, as it reduces inconsistencies between the two markets, allowing firms to seamlessly navigate both. The Government’s commitment to fostering growth hinges on creating an economic environment that attracts firms and their investment.

The market’s positive response, reflected in bank values rising, is as clear sign of confidence that the delay is an early indication that the Government and HM Treasury are serious about scaling back more substantial reforms to the rules.

Want to know more?

Read our comprehensive breakdown of the Basel 3.1 roadmap up to this point – Basel 3.1 | Summary of the PRA’s Second Instalment of Rules.