Bank of England Announces Revised Basel III Capital Rules

The Bank of England is set to implement new capital rules for UK banks by January 1, 2026, following substantial amendments to previously proposed Basel III reforms. Adjustments aim to balance lender stability and economic growth without hindering global commercial interests. The revisions reduce capital requirements for SME lending and mortgage valuations.

The Bank of England is preparing to unveil new capital rules for UK banks, expected to take effect from January 1, 2026, after considerable revisions to the Basel III reforms. These changes are designed to strike a balance between ensuring lenders' stability and fostering economic growth, all while safeguarding global commercial interests.

Notably, the amendments will lower capital requirements for lending to small and medium-sized enterprises (SMEs) and infrastructure projects. The regulatory body also aims to simplify the valuation process for residential mortgages, mitigating concerns that earlier proposals could restrict affordable credit supply.

The move aligns the UK with European practices in SME lending but maintains some differences in mortgage regulations. The revised rules come amid similar adjustments in the U.S. and EU, highlighting a global trend towards recalibrating post-2008 financial crisis safeguards.

(With inputs from agencies.)