The Bank of England (BoE) has once again announced a delay to the implementation of a stricter capital requirements regime (Basel 3.1) for banks in the United Kingdom. The new deadline now is January 1, 2027.

The BoE’s Prudential Regulation Authority (PRA) said in a statement last week that the one year delay (from January 2026 to January 2027) “allows more time for greater clarity to emerge about plans for its implementation in the United States.”

“Given the current uncertainty around the timing of implementation of the Basel 3.1 standards in the US, and taking into account competitiveness and growth considerations, the PRA, having consulted with HM Treasury, has decided to further delay implementation of the rules,” the statement reads.

The PRA has said that, in light of this delay, it has also paused its data collection exercise which was meant to “inform an off-cycle review of firm-specific Pillar 2 capital requirements.”

Equity

The new global capital requirements, generally referred to as The Basel III regime, were first introduced more than a decade ago. The idea behind the new regime is to require banks to have more equity available in order to absorb stress.

It’s worth highlighting that both the US Federal Reserve and the Bank of England had already slashed the original tougher requirements for banks in those two countries in September last year, after lobbying and pressure from the industry.

And regulators in the UK have faced constant pressure from the government too in recent months. Prime Minister Keir Starmer promised investors last October that his government would get rid of any regulatory bureaucracy that hindered economic growth.

Following the PRA’s latest announcement, “Shares in UK banks rose at the open on Friday morning, with Barclays up 1.7 per cent, Lloyds up 1.2 per cent and NatWest up 1 per cent,” the FT has reported.

Continuous uncertainty

Much of the hesitation around the implementation of the Basel III regime stems from uncertainty over what might happen to the framework in the United States.

Regulators are concerned that it could be watered down further, or even scrapped completely, under the incoming Trump administration. And that causes confusion and uncertainty around its future elsewhere.

Gene Ludwig, CEO of Ludwig Advisors, was quoted by Reuters as saying: “The Basel endgame rule could be completely dead” once Donald Trump returns to the White House.

Sam Woods, Deputy Governor of Prudential Regulation and CEO of the PRA, said in September last year: “These rules will improve the way in which we regulate the banks in order to maintain safety and soundness and wider financial stability.”

But despite the changes last September to the original requirement limits in the US and the UK, the banking industry has strongly lobbied against the Basel 3.1 regime.

On the other hand, some experts have warned backing off from the Basel rules could encourage banks to take more risks, which in return could pave the way for another crisis.

Alex Viall, Chief Strategy Officer at Global Relay, told GRIP: “The UK is in an interesting position from a banking capital perspective – it makes sense to wait to see what the new US administration might do as this is hard to predict based on previous precedent.”

According to Viall: “The delay allows the UK to react consistently and this all plays well to the new UK growth agenda. It also feels like the UK is exercising its new independence from the EU post-Brexit to suit circumstances.”