Britain aligns with EU on delaying Basel bank capital rules

People stand outside the Bank of England in the City of London financial district in London, Britain, January 23, 2022. REUTERS/Henry Nicholls

LONDON, March 21 (Reuters) - The Bank of England said on Monday it planned to delay implementing a final set of post-financial crisis capital requirements for banks until January 2025, bringing Britain in line with the European Union in a move that banks welcomed.

Tough bank capital reforms were agreed at a global level after banks were bailed out by taxpayers in the crisis.

Lenders already hold far more capital under the initial elements of the "Basel III accord," whose final elements had been due to come into force in January this year, but were delayed by a year to January 2023 due to COVID-19.

The European Union, however, decided to propose delaying implementation by a further two years to January 2025 to give banks more time to adjust, forcing Britain and other jurisdictions to decide whether to follow suit.

The Bank of England said it would publish a consultation paper in the fourth quarter on implementing the final rules of Basel III.

"In addition, taking into account the publicly-announced implementation timetables in other major jurisdictions, and the need to provide firms with sufficient time to implement the final policies, our current intention is to consult on a proposal that these changes will become effective on 1 January 2025," the BoE said in a statement on Monday.

UK Finance, which represents banks in Britain, said the BoE statement brought much needed clarity about the timing of new capital rules.

"Not only will this aid the planning of a complex, multi-faceted implementation project but it will ensure firms’ capital planning and stress testing, which looks five years into the future, is aligned with the prudential regulator’s expectations," said Simon Hills, UK Finance's director for prudential policy.

Reporting by David Milliken and Huw Jones Editing by Ed Osmond and Mark Potter

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