PS1/26 – Implementation of Basel 3.1: Final rules
Executive Summary
The Prudential Regulation Authority (PRA) has published the final rules for the implementation of Basel 3.1 standards in the UK, with an effective date of January 1, 2027. The rules aim to enhance the resilience of banks and improve the stability of the financial system. Firms must review and update their policies and procedures to ensure compliance with the new requirements.
What Changed
The PRA has introduced new rules for the calculation of risk-weighted assets, including changes to the credit risk standardised approach, market risk framework, and operational risk requirements. The rules also include amendments to the definitions of probability of default, loss given default, and conversion factor.
Action Required
- Review and update credit risk policies and procedures to ensure compliance with the new standardised approach
- Assess the impact of the new market risk framework on trading book positions and capital requirements
- Update operational risk management frameworks to reflect changes to the Business Indicator and subcomponents
Key Dates
Non-Compliance Risk
Non-compliance with the new rules may result in enforcement action, fines, or other regulatory penalties
Who is Affected
Related Regulations
Summary
Policy statement 1/26