Brussels: The European Commission adopted temporary adjustments to new market risk capital rules for banks to prevent EU lenders from being put at a competitive disadvantage against international rivals. The commission announced that these measures concern the Fundamental Review of the Trading Book (FRTB), part of the Basel III global banking standards, which is designed to strengthen risk measurement in banks' trading activities and ensure capital requirements more accurately reflect actual market risks.
According to Anadolu Agency, the adjustments will apply from January 1, 2027, for a period of three years, subject to review by the European Parliament and the Council. The scrutiny period will last three months and may be extended by another three months. If no objection is raised, the measures will enter into force. The commission stated that the EU has implemented all other Basel III standards since January 1, 2025, but delays in the implementation of the FRTB by major jurisdictions have raised concerns over competitive distortions for EU banks active in global financial markets.
To address these concerns, the commission had already postponed the market risk rules for two years, exhausting the full deferral period under the Capital Requirements Regulation. It has now used its authority under the regulation to introduce targeted adjustments to the FRTB through a delegated act, including a multiplier to temporarily offset capital impacts for EU banks adversely affected by the implementation. Maria Luis Albuquerque, commissioner for financial services and the savings and investments union, emphasized that Europe's banks must be able to compete on equal terms with their international peers. She noted that these targeted and time-limited measures help preserve a level playing field in global financial markets while maintaining the EU's commitment to the Basel standards.
Albuquerque added that the measures provide certainty for EU banks, support the objectives of the Savings and Investments Union, and give the commission time to monitor developments in other major jurisdictions before deciding on the most appropriate long-term approach. The commission explained that the delegated act was prepared following a public consultation and technical assessment, aiming to ensure smooth and coherent implementation of the FRTB in the EU while allowing further monitoring of its global rollout.