POLITICO: EU hints at relaxing parts of global bank rules in face of US delays

10 April 2024

European Commission “stands ready to act if necessary” after U.S. said alterations to its plan were likely.

The EU has signaled it could relax the way it pushes through controversial international banking standards if it believes that's what's needed to better compete with the rest of the world.

The European Commission “stands ready to act if necessary” in light of “the uncertainty around the implementation of the standards in other jurisdictions and the importance of having an international level-playing field,” a spokesperson told POLITICO.

Any loosening of the Basel rules would raise questions about the bloc’s reputation for tight banking supervision, reigniting fears that the EU could be labeled “non-compliant” by the global banking standard-setter for straying too far from the internationally agreed standards. 

The standards, known as "Basel Endgame" in the U.S., update rules drawn up after the 2007-8 financial crisis, and aim to bolster bank safety by ensuring financial institutions have sufficient reserves when they lend. While they were agreed in 2017 by global regulators in the Basel Committee on Banking Supervision, jurisdictions around the world have written their own versions of the standards since they are not legally binding.

The European version is set to apply on Jan. 1, 2025. In theory, that would be six months earlier than the U.S. and U.K., but in practice, there could be further delays and changes in the U.S., prompting the EU to consider looking again at what it pushes into law.

Transitional arrangements until 2032

The EU’s legal texts implementing the standards have been agreed by the bloc's governments and the European Parliament but not yet officially approved. They include a mandate for the Commission to alter the part of the rules that cover market risk, known as FRTB, if needed to create a level playing field with other jurisdictions....

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