EU delays new market risk capital rules for banks by 3 years

• Measures aim to preserve level playing field for EU banks amid delays in other major jurisdictions

The European Commission adopted temporary adjustments to new market risk capital rules for banks to prevent EU lenders from being put at a competitive disadvantage against international rivals.

The commission said Thursday that the measures concern the Fundamental Review of the Trading Book (FRTB), part of the Basel III global banking standards, which is designed to strengthen risk measurement in banks’ trading activities and ensure capital requirements more accurately reflect actual market risks.

The adjustments will apply from Jan. 1, 2027 for a period of three years, subject to review by the European Parliament and the Council. The scrutiny period will last three months and may be extended by another three months. If no objection is raised, the measures will enter into force.

The commission said the EU has implemented all other Basel III standards since Jan. 1, 2025, but delays in the implementation of the FRTB by major jurisdictions have raised concerns over competitive distortions for EU banks active in global financial markets.

To address these concerns, the commission said it had already postponed the market risk rules for two years, exhausting the full deferral period under the Capital Requirements Regulation. It has now used its authority under the regulation to introduce targeted adjustments to the FRTB through a delegated act, including a multiplier to temporarily offset capital impacts for EU banks adversely affected by the implementation.

“Europe’s banks must be able to compete on equal terms with their international peers,” said Maria Luis Albuquerque, commissioner for financial services and the savings and investments union.

“These targeted and time-limited measures help preserve a level playing field in global financial markets while maintaining our commitment to the Basel standards,” she added.

Albuquerque said the measures provide certainty for EU banks, support the objectives of the Savings and Investments Union, and give the commission time to monitor developments in other major jurisdictions before deciding on the most appropriate long-term approach.

The commission said the delegated act was prepared following a public consultation and technical assessment, and aims to ensure smooth and coherent implementation of the FRTB in the EU while allowing further monitoring of its global rollout.