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Basel 3.1

Basel 3.1 rules will become effective in the UK from 1 January 2026, is a continuation of the post global financial crisis reform package that was initially implemented in 2013. The primary objective of the revisions in the current framework is to improve the reliability of capital ratios, by making standardised approaches more risk-sensitive, addressing limitations of Internal Models (IMs), and restricting the benefits that IMs can provide by introducing an ‘output floor’. This would improve both the measurement of risk and the comparability across firms.

Basel 3.1

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UK Basel 3.1: An overview of the near-final rules

On 12 September 2024, the Prudential Regulation Authority (PRA) published the second part of its near-final rules on the implementation of Basel 3.1 standards through Policy Statement 9/24 (PS9/24). The first part of these near-final rules was issued on 2 December 2023, as part of PS17/23.

This article provides an overview of the near-final rules published by the PRA, as part of the UK's implementation of Basel 3.1 (PS9/24).

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CP14/24 – Large Exposures Framework - Key changes

The PRA published a Consultation Paper on 18 October 2024, outlining proposals to implement the remaining Basel large exposures standards (LEX standards). A key change for small and medium-sized banks is the proposed removal of CRM eligibility for immovable property, meaning exposures secured by immovable properties would no longer qualify for CRM under Large Exposures.

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Simplified Capital Regime for Small Domestic Deposit Takers (SDDTs)

On 12 September 2024, the PRA published Consultation Paper 7/24 (The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers (SDDTs)) as part of its Phase 2 of announcements, which sets out the proposed simplified capital regime for SDDTs.

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UK Basel 3.1: Credit risk standardised approach – exposures to corporates

This article outlines the changes relating to credit risk corporate exposure classification and risk weights under the standardised approach, as part of UK’s implementation of Basel 3.1 (PS9/24).

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UK Basel 3.1: Credit risk standardised approach – retail exposures

This article outlines the changes relating to credit risk retail exposure classification and risk weights under the standardised approach, as part of UK’s implementation of Basel 3.1 (PS9/24).

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UK Basel 3.1: Credit risk standardised approach – exposures to institutions

This article outlines the changes relating to exposures to institutions under the standardised approach of credit risk, as part of UK’s implementation of Basel 3.1 (PS9/24).

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How can we help you?

Banks may face a variety of challenges when understanding or applying the new requirements, including assessing the impact on the Bank’s governance, systems, data sourcing, training etc. At Katalysys, we have a deep understanding of upcoming changes from the perspective of both regulatory rules and practical implementation.

Our team is supporting a range of clients in this area. Our support can be in the form of:

  • workshops or training to cover the new requirements;

  • gap/Impact analysis;

  • guidance on implementing industry best-practice in relation to Basel 3.1 standards;

  • documentation of the bank-specific assumptions and interpretation;

  • preparation of overall procedure notes;

  • validation of the systems/calculations; or,

  • review of the regulatory returns.