In an indication of how the new Trump administration may affect financial regulation globally, the Bank of England announced on Friday that it will postpone important bank capital regulations for a year while the United States makes a decision.
Following consultation with the U.K. Treasury, the Prudential Regulation Authority of the Bank of England said that it will postpone Basel 3.1’s implementation by one year, to January 1, 2027. In September, it had already forced them back six months.
According to a statement from the central bank, “this allows more time for greater clarity to emerge about plans for its implementation in the United States.”
The Bank of England stated that 2030 will still be the date of full implementation.
The so-called Basel III endgame requirements, which would have required U.S. banks to retain an additional $2 in capital for every $100 in risk-weighted assets, have been fiercely opposed by these institutions. The Federal Reserve’s vice chair of supervision, Michael Barr, resigned, thus putting a stop to any new standards until a replacement is found, and they have so far been successful in blocking proposed measures.
A steeper yield curve and expectations of less regulation have contributed to the 35% increase in the SPDR S&P Bank ETF KBE since February. This week, major banks like Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM) exceeded analyst earnings projections for the fourth quarter.