European Commission delays bank trading risk capital rules as U.S., UK rollout remains unclear

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EU delays bank risk capital rules

Highlights

European Commission delays rollout of FRTB market risk capital rules for banks by three years to avoid disadvantaging EU lenders versus U.S. and UK peers.
The new regime, previously set for January 2027, will now apply from 2027 through end-2029 unless vetoed by EU governments or Parliament within six months.
The three-year postponement, coordinated with the ECB and EBA, allows Brussels to monitor U.S. and UK implementation before determining a long-term EU approach.

Delayed rollout of FRTB rules

As reported by Reuters, the European Commission says it will postpone by three years the introduction of new market risk capital requirements for banks to avoid placing EU lenders at a competitive disadvantage while other major jurisdictions finalize their own approach.

The framework is part of the Fundamental Review of the Trading Book, or FRTB, within the broader Basel III standards designed to improve how banks measure trading risk and ensure capital levels better reflect exposures taken in financial markets.

Maria Luis Albuquerque, the EU commissioner for financial services, says Europe's banks must be able to compete on equal terms with international peers. She says the targeted and time-limited measures preserve a level playing field in global financial markets while maintaining the bloc's commitment to Basel standards.

Implications for European banks

Without the change, the new capital rules would have applied in full from January 2027 under existing EU law. The Commission's revised regime is set to run from 2027 through the end of 2029 unless it is vetoed within the next six months by EU governments or the European Parliament.

Officials say the three-year delay has been agreed with the European Central Bank and the European Banking Authority. The move gives Brussels more time to monitor implementation in the U.S. and UK before deciding on the most appropriate long-term approach for the region's banking sector.

Our earlier coverage of Brussels’ renewed drive to deepen EU capital markets integration explained how the bloc is trying to address long-standing fragmentation by reviving the Capital Markets Union agenda. We noted that a more unified EU funding and investment market could keep more financial activity on the continent, reshape the balance with the City of London, and improve how European savings are channeled into growth.

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