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Europe to Delay Bank Trading Rules by One Year, McGuinness Says - BLOOMBERG

JUNE 18, 2024

by Nicholas ComfortBloomberg News

Mairead McGuinness

Mairead McGuinness , Bloomberg

(Bloomberg) -- The European Union will delay a key part of global bank capital rules by a year, so that the bloc’s lenders will not be disadvantaged by continued wrangling over the standards in the US.

The EU will implement standards related to the so-called fundamental review of the trading book at the start of 2026, rather than in 2025, Mairead McGuinness, commissioner for financial services and markets, said in a speech on Tuesday in Frankfurt.

Bloomberg reported the plan to delay the rules last week. 

The EU has been under increased pressure over the so-called finalization of Basel III in recent months, with leaders including French President Emmanuel Macron arguing that Europe would disadvantage its banks by moving first. Deutsche Bank AG Chief Executive Officer Christian Sewing had also called on the Commission to act, citing the “fierce” international competition that European banks face.

“This one-year delay ensures a global level playing field, for those big European banks competing with other global players,” McGuinness said. The US is unlikely to implement the new Basel standards before 2026, she said.

The development is the latest blow to a landmark package that was already running two years behind schedule, prompted by the pandemic and demands by banks for an additional year of preparations. Some regulators now fear that political backlash in the US, coupled with a European agenda that’s focused more on growth, could lead to a wider rowing back of the measures. 

“The delay of one year of the market risk rules in the EU should not be considered an encouragement to depart from this international agreement,” McGuinness said. The EU still plans to implement “the bulk of the Basel standards” by Jan. 1, she said.

Implementation of the full package would increase capital requirements for banks in the EU by 9.9%. In the US, they would go up even more, according to initial plans there.

The topic has become a political flash-point, and US authorities are still fighting over what version of the wider package of measures, known in that country as Basel III Endgame, to agree on. The UK has set a start date of mid-2025.

“We sincerely hope that the US will apply the Basel III standards at the earliest opportunity,” McGuinness said. “Given the length of the procedures to postpone these rules in the EU, we could not wait any longer,” she said of the bloc’s planned delay.


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