Understanding Basel 3.1
On 1 July 2025, the Prudential Regulation Authority (PRA) is implementing the biggest changes to the capital regime for banks in over a decade. This reform package is commonly known as Basel 3.1.
Expectations ahead of final Basel 3.1 rules
Pending the release of the PRA’s Basel 3.1 final rules, our banking risk experts discuss the proposed changes to credit risk and output floor rules, as well as the near-final rules relating to market risk and operational risk.
Listen back to the first webinar in our Basel 3.1 series where our banking risk specialists discuss how the rules may impact UK banks and building societies.
Key takeawaysFor the Credit Risk and Output Floor proposals, which have not yet received near-final policy statements from the regulatory authorities, our understanding is that there remains a possibility that significant changes to the Consultation Paper (CP16/22) are made. This is because the PRA have recently been making increasing noise about ensuring the ‘international competitiveness’ of the UK’s approach. This contrasts with the language used by the regulator around the time of CP16/22’s release where greater focus appeared to be on ensuring material compliance with the underlying Basel proposals. For Operational Risk, Market Risk and CVA, which were covered in PS17/23 and are therefore ‘near final’, there is less scope for the PRA to deviate from their proposals. However, this should be caveated with the fact that until HMT provide final sign-off (expected later this year) the regulator continues to have wriggle room. |
Speakers
- Huseyin Sahin, Partner Banking Risk Consulting
- Nicolas Cerrajero, Partner, Quantitative Solutions
- Freddie Blake, Associate Director, Banking Risk Consulting
- Moderated by Breda Griffin, Director, Banking Risk Consulting
Get in touch
If you have any further questions regarding Basel 3.1, please contact us via the button below and a member of our team will be in touch.
Basel 3.1 series
This webinar series will provide insight and analysis of the PRA’s implementation of Basel 3.1. The rest of the series will take place following the release of the outstanding final policy rules on Basel 3.1 by the PRA.
Basel 3.1 – Near-final rules part 1
Policy statement 17/23 (PS17/23) contains Basel 3.1 near-final policy materials for market risk, credit valuation adjustment (CVA) risk, counterparty credit risk and operational risk.
Basel 3.1 – Understand the regulation
In this series of short articles, our Prudential Regulation Consulting team delves into the implications of Basel 3.1 changes on banks.
Basel 3.1 video series
Basel 3.1 is the final set of amendments to the capital regime for banks after the Global Financial Crisis. The Prudential Regulation Authority (PRA) proposed that the implementation date for the changes would be 1 July 2025. In this series, we take a closer look at what firms need to consider before these reforms will be live in the UK.
UK vs EU Basel comparison
Both the UK and the EU are consulting on the next wave of iterations to the Basel reforms. Whilst the focus of these consultations has been relatively broad, the rules around the computation of Pillar 1 Credit Risk RWAs seen the most significant change. This article outlines some of the main differences between the UK and EU approaches on this topic, along with our thoughts on these divergences.
Banking - Q4 2022
There were several regulatory developments in Q4 2022, including the launch of the consultation paper on Basel 3.1. This was followed by the publication of the 2023 priorities letter from the PRA in January 2023. In this update, we have discussed the key regulatory developments from Q4 2022, and also discussed the PRA priorities letter from Q1 2023.
Key contacts
Gregory Marchat Partner – Head of UK Financial Services - London
Huseyin Sahin Partner - Banking Risk Consulting London
