Bank of England faces calls to delay new global banking capital rules

The Bank of England is facing calls to postpone the UK’s implementation of the new global banking capital rules by six months to prevent a period of regulatory divergence that would hinder British banks’ ability to compete with Wall Street.

At the end of July, US regulators proposed plans to increase the capital requirements for the largest and most complex US banks by 16% under new ‘Basel III Endgame’ rules, to be adopted in June 2025.

Meanwhile, the BoE’s Prudential Regulation Authority will implement its own set of new capital requirements – also dubbed the ‘endgame’ of the post-GFC Basel reforms – from January 2025, to align with the EU’s own launch.

According to a report by the FT, UK-based finance executives raised concerns about the cost of running different regimes in different countries and warned that the competitiveness of UK banks could be affected, particularly in global markets.

Jared Chebib, a partner at EY, told the newspaper: “The proposal… to push back the US Basel IV implementation schedule until 1 July 2025 creates challenges with misalignment across jurisdictions, particularly for global banks headquartered in the UK.”

The PRA reportedly privately indicated earlier this year that it would be “open” to aligning with the US if it opted to delay the implementation date.

Simon Hills, leader of UK Finance’s prudential and capital team, told the FT that while a six-month delay would not by itself add much value for UK banks, “our thinking is that we do not want to be on different timescales in different major jurisdictions”.

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