PRA's Near Final Basel 3.1 Rules for UK Banks Provide Clarity; Variations between Jurisdictions will Remain

The UK PRA's publication of Part 2 of the final Basel 3 rules brings clarity for UK banks in the implementation of the complex Basel capital regulations. The standards that are called Basel 3.1 in the UK are intended to capture risks more accurately and reduce variability in allocations of capital between banks and jurisdictions. The PRA indicated that major UK banks are expected to see a less than 1% increase in Tier One capital requirements by 2030 as a result of the standards, and the implementation period has been pushed back 6 months to run from January 2026 to January 2030. "We see the PRA's announcement of near final Basel 3.1 rules as helpful for UK banks, however we consider there will remain significant variations between banks and jurisdictions even when these standards are implemented" said Elisabeth Rudman, Managing Director, Global Financial Institution Ratings at Morningstar DBRS.