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UK to delay implementation of global banking reforms

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The Bank of England will delay the implementation of the last package of post-crisis global banking reforms for another six months, aligning its approach with that of the United States as officials weather an avalanche of industry commentary.

The new rules, part of broader Basel III reforms, are the latest effort by global authorities to insulate the banking industry against excessive risk-taking that culminated in the 2007-08 financial crisis.

The package includes limiting banks’ ability to decide how much capital they need to support certain loans and operations, measures that generally increase banks’ costs, although the Bank of England has said that is not the aim.

The Bank of England is preparing to reveal an implementation target date of July 2025 in the coming weeks, in line with the July 2025 date announced by the United States over the summer, several people briefed on the plans told the Financial Times. .

The rules were due to come into force in January 2025, after years of delays from the initial target of January 2021.

The Bank of England declined to comment.

UK-based banks have rejected some of the Bank of England’s proposals which they say will put them in a difficult position. disadvantage against EU banks. EU policymakers have adopted such a pro-industry stance that the ECB has warned His approach could give the harmful impression that European banks were subject to lax regulation.

The U.K. Treasury and some banks had been informed about the Bank of England’s plans, the people said. They added that the Bank of England intended to shorten the five-year transition period by six months and delay the finalization of certain rules.

While the banks had held down For the delay to avoid the logistical conundrum of a staggered rollout across two major jurisdictions, the Bank of England believes the delay is independently justified because the UK’s original timelines had become so challenging.

The Bank of England had promised to draw up “almost final” rules on its entire Basel package by the end of the year, giving banks 12 months to prepare. Officials have privately told banks that the volume of responses to consultations the Bank of England received made the target difficult to achieve.

The Bank of England now expects to publish “almost final” rules in December only for the most complex markets and trading areas, and that rules for everything else will be published next May, people familiar with the matter said.

“Alignment with the US is helpful, but we think the US is likely to be delayed by six more months – it’s easy to say ‘we’re listening’ when there’s so much discussion about the content,” said a senior policy executive. at one of the UK’s largest banks.

“The UK and EU should remain flexible to accommodate a further delay by the US,” they said, adding that banks were “sadly to see the phase-in reduced by half a year or perhaps; always “We want more time to adjust.”

The new timetable leaves the UK out of sync with the EU, which still has a January 2025 deadline. A senior EU regulator said the EU could still, in theory, extend its implementation, but as the EU already had a longer phase-in period for the rules, “is not a big deal.”

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