EU May Delay New Risk Prudential Banking Rules Until 2027

The European Union may postpone the introduction of new ‘risk prudential’ banking regulations until 2027 due to concerns that implementing them sooner could put the EU banking sector at a disadvantage internationally.

The European Commission has launched a new consultation on the initiative, despite having initially set the rules to take effect on 1 January 2026. These regulations would require EU banks to hold higher capital reserves to better withstand financial shocks.

The Commission had originally planned to enforce the new rules as part of the EU’s adoption of ‘Basel III,’ an international framework designed to strengthen bank stress tests and liquidity regulations. While Basel III itself is not legally binding, the EU intends to enshrine it into law. The implementation of these risk prudential regulations was initially scheduled for 2025 but was subsequently pushed back to 1 January 2026.

John Berrigan, Director-General for Financial Stability at the European Commission, explained that the delay is due to differing implementation timelines in other countries. “Last year, the Commission postponed the market risk own funds requirements to 1 January 2026 to maintain a level playing field for EU banks,” he stated. “This delay ensures EU banks don’t face disadvantages internationally.”

The Commission is now seeking feedback from banks on three possible approaches:

• Proceeding with the rules as planned on 1 January 2026.

• Delaying the implementation until 1 January 2027.

• Introducing temporary amendments for up to three years.

The Commission justified the potential delay by stating it aims “to align implementation with other major global jurisdictions.” It also noted that “recent international developments indicate further possible delays in these jurisdictions, raising concerns on the international level playing field and the impact on EU banks.”

“The Commission remains vigilant to avoid internationally active EU banks being penalized, as well as preserving their competitiveness,” it added.

The consultation period will remain open until 22 April 2025. Those interested in providing feedback can respond here.

By fLEXI tEAM