The European Union has announced it will postpone the implementation of a key element of the Basel III bank capital reforms by one year to January 2026.

The delay applies to the "fundamental review of the trading book" (FRTB) rules covering how banks capitalise for market risks in their trading activities.

EU Financial Services Commissioner Mairead McGuinness explained the move was prompted by expectations that the US would also be unable to meet the previously planned January 2025 deadline for these reforms.

"In practice, the entry of application of the Basel standards in the US is now highly unlikely to take place before January 1st, 2026, at the earliest," she stated. "This one-year delay ensures a global level playing field, for those big European banks competing with other global players. It gives us time to see what others are doing.”

The remaining Basel III capital rules are still set for implementation across the EU from January 2025 as originally scheduled.

The FRTB standards unveiled by the Basel Committee in 2016 require banks to hold more capital to absorb potential losses from trading activities. Big European lenders had lobbied hard for a delay, arguing stricter rules would disadvantage them versus U.S. rivals if not implemented in parallel.

"If you can't offer to corporate clients the same products and conditions from day one, you will lose competitiveness in the trading business," said Gonzalo Gasos of the European Banking Federation, welcoming the postponement.

U.S. regulators had proposed implementing their version of the FRTB by July 2025 but faced intense pushback from banks. Federal Reserve Chair Jay Powell conceded "broad and material changes" were likely after receiving hundreds of critical comments. Re-proposing the rule is a possibility, which could delay it further.

The delay highlights the challenges in finalising the post-2008 crisis Basel III reforms, originally meant to be largely in place by 2019. France's President Emmanuel Macron has called for revised application of the rules, saying "the EU cannot be the only economic area in the world that applies it."

McGuinness expressed "deep frustration" at lack of progress in integrating EU financial markets more broadly. She urged member states to stop focusing on "what they could lose" nationally and think about "what they could gain" from deeper integration to fund priorities like the green transition.

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