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Basel Requirements Halved for UK Lenders

Basel Requirements Halved for UK Lenders

(12 December 2023 - United Kingdom) The Bank of England said on Tuesday that implementing the final leg of the global Basel bank rules will increase capital requirements at UK banks by 3 percent, far less than for their European Union and U.S. peers.

Regulators began rolling out tougher capital rules after the global financial crisis of 2007-09 when taxpayers had to rescue ailing banks.

Britain, the EU, U.S. and other countries are now finalising how they will implement the final leg of the so-called Basel III capital standards, tailoring them to local circumstances.

The BoE published on Tuesday the first of two "near final" policy statements on implementing the Basel rules, saying it had made some tweaks to its original proposals following a public consultation.

The BoE said it estimates the impact of the final leg of Basel on UK banks will be "low" at an average increase in Tier 1 capital of about 3.2 percent once fully phased in by January 2030, down from an estimated 6 percent increase last year as data is refined.

"This is lower than the European Banking Authority’s estimate of a Tier 1 increase of around 10 percent in the EU and the US agencies’ estimate of a CET 1 increase of around 16 percent for US firms," the BoE said.

U.S. banks have mounted a heavy lobbying campaign against the Federal Reserve's proposals for implementing Basel, which follow several bank failures, including Silicon Valley Bank, earlier this year.

"The rules published today implement the latest Basel standards in the UK and include appropriate adjustments to take on points raised by respondents to our consultation," BoE Deputy Governor Sam Woods said in a statement.

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