The Bank of England is planning to push back implementation of the final round of Basel reforms by six months after receiving a deluge of industry feedback.
The Basel reforms are the global regulatory overhaul undertaken in the wake of the 2008 financial crisis, which set new minimum standards for liquidity and capital requirements.
Negotiations have been going on for years and after a series of delays, regulators announced implementation at the start of 2025.
However, over the summer regulators in the US pushed back the implementation deadline until July 2025 and, according to the Financial Times, the Prudential Regulation Authority (PRA) is preparing to do the same. The five-year phasing in will be cut by six months as well, the FT reported.
While the decision puts the UK in line with the implementation timeline in the US, the decision also reflects the extent of feedback that the regulators have received in response to their consultations.
Implementing the Basel reforms has been a controversial process. Banks in the US have slammed regulators for opting for the most conservative interpretation of the rules among major economies while regulators in the EU have been criticised for giving banks too easy a ride.
In the UK, Natwest chief financial officer Katie Murray told a conference last week that the overall package would be “very bad” for the UK economy while outgoing chair Sir Howard Davies said the reforms would put UK banks at a “competitive disadvantage”.
A number of banks have highlighted specific concerns around the impact the regulations will have on lending to small businesses. As the rules stand, regulators would take away preferential treatment for small businesses which banks warn could dramatically reduce SME financing.
Richard Davies, chief executive of Allica, a challenger bank that lends to businesses, said the delay “suggests regulators are listening to the concerns many of us across the SME finance market have raised”.
While Lee Doyle, co-chair of the bank industry sector at law firm Ashurst, admitted that reflection on industry feedback “must be considered a good thing”, he warned that there needed to be momentum in order to clarify the proposals.
“After too long a pause the worst scenario is continued delay and uncertainty,” he said.
The Bank of England was contacted for comment.