The UK Prudential Regulation Authority (PRA) has published policy statement PS11/26 on disclosure, including resolvability resources, capital distribution constraints (CDCs) and the basis for firms' Pillar 3 disclosures. Having considered the responses to the July 2025 consultation, the PRA has made no changes to the draft policy consulted on but has made minor corrections and clarifications to the draft rules and instructions. These clarifications do not affect the substance of the policy or rules as set out in the consultation paper.

The PRA's final policy includes:

• The introduction of standardised Minimum Requirement for Own Funds and Eligible Liabilities (MREL) disclosure templates, aligned with Basel Committee on Banking Supervision Total Loss Absorbing Capacity (TLAC) formats but adapted for the UK.
• Increased transparency and consistency of firms' disclosure on MREL resources to strengthen market discipline, support confidence in orderly resolution and enhance overall financial stability.
• A new qualitative disclosure requirement for firms subject to capital distribution constraints to allow for more meaningful assessment by market participants of the likely impact of those capital distribution restrictions. As the Systemic Risk Buffer (SRB) has been replaced in the UK by the O-SII buffer since December 2020, the PRA has also removed the SRB disclosure requirement to ensure consistency with the current capital buffer framework.

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The Basel Committee on Banking Supervision (BCBS) has published a document containing a finalised technical amendment (TA) and a response to a frequently asked question (FAQ) to help promote the consistent global interpretation of the Basel framework. The TA relates to the standardised approach to operational risk. It clarifies the treatment of "rental income from investment properties" under the business indicator, which is used as a key input in calculating operational risk capital requirements. The TA was originally consulted on in June 2025 and, following feedback, it now incorporates similar changes to the treatment of "interest expenses". The BCBS has agreed to implement the final revised standard by 1 April 2029. The amended text has also been incorporated into the consolidated Basel framework.

In addition, the document also includes a finalised response to an FAQ on market risk and consequential amendments to related FAQs. These have also been added to the Basel framework.

The European Banking Authority (EBA) has published final draft amending regulatory technical standards (RTS) shortening the timing for the application for prior permission to reduce own funds and eligible liabilities instruments under Articles 77, 78 and 78a of the capital requirements regulation (Regulation 575/2013). The amendments shorten the timeframe for competent and resolution authorities to process an institution's application to reduce own funds and eligible liabilities instruments from four to three months on the basis that authorities now have sufficient experience with these procedures to carry out the assessments more efficiently. In addition, following the exemption introduced by Directive 2024/1174 (the Daisy Chain Directive), which removes the requirement for liquidation entities to obtain prior permission to reduce eligible liabilities instruments, the provisions setting a simplified procedure for these entities have been deleted. The draft regulatory technical standards will be submitted to the EU Commission for endorsement following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union (OJ). They will enter into force 20 days after publication in the OJ.

The UK Prudential Regulation Authority (PRA) has published consultation paper CP5/26 proposing reforms to modernise the existing prudential liquidity framework, taking into account advances in digital banking, payments and communications, and structural developments in the supply of central bank reserves. The proposals focus on targeted amendments to Pillar 2 and through changes to the Internal Liquidity Adequacy Assessment (ILAA) rules and related supervisory expectations within relevant supervisory statements.

Key proposals include:

• Requiring firms to assess the composition of their liquidity resources, identify barriers to monetising assets and conduct internal stress testing to evaluate their ability to respond to rapid and severe liquidity outflows within the first week of stress. The PRA also seeks to replace the concept of "marketable asset risk" with a broader assessment of monetisation risk.
• Removing the exemption for sovereign bonds and other Level 1 assets from annual testing of monetising non-liquid assets, to provide greater assurance that firms are operationally prepared to raise liquidity quickly in stress.

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The European Commission has adopted a Delegated Regulation amending the regulatory technical standards (RTS) set out in Delegated Regulation (EU) 2023/206. The Amending Regulation is technical in nature and updates the RTS to ensure consistency with changes introduced to the Capital Requirements Regulation (EU) No 575/2013 (CRR) by Regulation (EU) 2024/1623 (CRR3). In particular, the amendments: (i) align the references to Article 124 CRR, which have become obsolete following the renumbering and revisions introduced by CRR3 concerning preferential risk weights for exposures secured by immovable property under the Standardised Approach; and (ii) reflect the updated terminology in Article 164 CRR, which now refers to the ability of an authority designated under Article 164(5) to set loss given default (LGD) input floor values, rather than higher minimum LGD values, for exposures located in one or more parts of its territory under the Internal Ratings Based Approach.

The Delegated Regulation is based on final draft RTS developed by the European Banking Authority and published in December 2025. It will enter into force 20 days after its publication in the Official Journal of the European Union and will be directly applicable in all member states.

The UK Financial Conduct Authority (FCA) has published its quarterly consultation paper No. 51, inviting feedback on proposed amendments to its Handbook. Significantly, it included a proposal to increase the clearing threshold for commodity derivatives under the UK version of the European Market Infrastructure Regulation (UK EMIR) to EUR5 billion, to ensure the threshold remains appropriate in light of higher commodity prices.

Other changes include:

• Consequential changes to the client assets sourcebook to ensure its effective application to regulated cryptoasset activities.
• Rehousing some provisions in Article 17 of the UK version of Commission Delegated Regulation (EU) 2017/587 (RTS 1) into the framework now provided by MAR 11A and tidying up provisions relating to private rights of action.
• Making targeted changes to the collective investment scheme sourcebook to reflect amendments in the 2025 Statement of Recommended Practice for authorised funds.

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The UK Prudential Regulation Authority (PRA) has published policy statement PS6/26 on its approach to recognised exchanges and main indices in the context of the revocation and restatement of the UK Capital Requirements Regulation (UK CRR). The PRA previously consulted on the proposals in March 2025 (CP3/25). In the policy statement, the PRA confirms that it will proceed with introducing a new Recognised Exchanges Part in its Rulebook, specifying conditions under Article 4(1)(72)(c) of the UK CRR for the purposes of identifying recognised exchanges (REs) or assets traded on these exchanges. Assets traded on REs receive a preferential treatment within the bank prudential framework. Only minor edits to the original proposal have been made for clarity. Proposed consequential amendments to the definition of "higher risk equity exposure" in the PRA's near-final rules implementing Basel 3.1 will also be maintained.

The PRA also confirms that it will restate in the Glossary to the PRA Rulebook the list of main indices currently set out in implementing technical standards in UK Commission Implementing Regulation (EU) 2016/1646. In addition, the policy statement sets out the PRA's final policy to delete supervisory statement (SS20/13) on third country equivalence aspects of the credit risk provisions in the CRR and recognised exchanges. It also makes amendments to the Counterparty Credit Risk (CRR) Part of the PRA Rulebook and the Credit Risk Mitigation (CRR) Part of the PRA Rulebook which are consequential to the PRA's REs policy proposals and the proposal to restate the list of main indices into the PRA Rulebook.

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The European Banking Authority (EBA) has published its final report with final draft implementing technical standards (ITS) on the supervisory reporting of third-country branches (TCBs) under the Capital Requirements Directive VI (CRD VI). Under the new framework introduced by CRD VI, TCBs will be required to submit two sets of reports covering TCB level financial and regulatory information and head-undertaking level quantitative and qualitative data. A key feature of the draft ITS is a proportionate "core and supplement" model, which tailors reporting requirements to the systemic relevance of each TCB. This means smaller and less complex branches are required to submit a core set of key data while larger and more complex branches report on additional details.

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The draft Capital Requirements Regulation (Market Risk Transitional Provision) Regulations 2026 have been published, together with a draft explanatory memorandum. The draft Regulations relate to changes to the UK implementation of Basel 3.1. They insert a new Article 465A into the UK Capital Requirements Regulation (UK CRR), introducing a transitional provision requiring credit institutions and designated investment firms not to apply the UK Prudential Regulation Authority's (PRA) market risk rules on updated internal model requirements between 1 January 2027 and 31 December 2027. This means that the UK implementation of the Basel 3.1 internal model requirements for market risk will now be delayed until 1 January 2028. Firms will be allowed to continue using their existing internal models under the current approach until then. The PRA previously consulted on adjustments to the market risk framework in July 2025. The Regulations will come into force on 30 December.

The draft Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026 have been laid before the UK Parliament and published with a draft explanatory memorandum. This follows HM Treasury's policy response on applying the Financial Services and Markets Act 2000 model of regulation to the UK Capital Requirements Regulation (UK CRR). The Regulations restate in legislation, with effect from 1 January 2027, the definitions previously contained in Articles 4, 4A, 4B and 5 of the UK CRR, which were revoked by virtue of section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023. Article 4 of the UK CRR will be revoked on 1 January 2027, together with other articles containing definitions relating to the UK banking prudential framework. The relevant legislation revoking these articles was published in February 2026.

The European Commission (EC) has launched a consultation seeking feedback on obstacles faced by private equity investors when exiting investments in EU private companies and on potential ways to address these obstacles. The consultation forms part of the EC's work under the Savings and Investments Union and aims to improve access to finance for EU start‑ups and scale‑ups. The EC notes that persistent challenges, such as not being able to wait for an initial public offering (IPO) to realise capital gains or the lack of a credible valuation of private assets may hinder a transaction. These difficulties reduce market activity, limiting the availability of growth capital and possibly prompting companies to move outside the EU in search of funding. Therefore, the EC is seeking views on the: (i) possible barriers or issues for exiting private equity investments in the EU; (ii) the merits and possible design features of a platform for secondary trading of private company shares; and (iii) the potential of an extended use of such a platform for raising new equity capital. The deadline for responses is 27 April, and the feedback will inform the EC's decision on whether further regulatory or policy action is warranted in this area.

The European Banking Authority (EBA) has published its final guidelines on instruments available for third-country branches (TCBs) for unrestricted and immediate use to cover risks or losses under Article 48e(2)(c) of the Capital Requirements Directive (2013/36/EU) (CRD IV). Under Article 48e of the CRD IV Directive, as amended by Directive (EU) 2024/1619 (CRD VI), an authorised TCB must maintain a minimum capital endowment at all times. Article 48e(2)(c) specifies that it may use for this purpose instruments that are available to the TCB for unrestricted and immediate use to cover risks or losses as soon as those occur. The EBA was mandated to issue guidelines on the instruments that can be used for this purpose.

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The Basel Committee on Banking Supervision (BCBS) has launched a consultation on a consolidated version of its guidelines and sound practices. This version seeks to reorganise existing guidance into a modular structure, replicating the BCBS's current format for the Basel framework. The guidelines are organised into 13 thematic modules, setting out expectations and practices on specific topics, each of which is divided into further chapters. The BCBS confirms that the consolidation does not introduce new standards or expectations, but removes outdated, duplicative or superseded content, reducing the overall volume of guidance by approximately 75%. Annex 2 to the consultation incudes a table of the current guidelines and sound practices that the BCBS reviewed as part of the consolidation project. It also outlines the proposed recommendation for whether and how each of these documents should be incorporated into the new framework. A new section on its webpage has also launched, but in draft form for feedback. The BCBS seeks feedback on three particular questions: 1) Does the framework effectively remove outdated, superseded and duplicative materials? 2) Does the proposed reorganisation and redrafting achieve the objective of improving clarity and readability without introducing new expectations? 3) Are there particular topics that the BCBS should review more substantively, or areas where further guidance is warranted? The deadline for comments is 26 June.

The European Banking Authority (EBA) has published an opinion and related letter regarding the European Commission's (EC') proposed amendments to the final draft regulatory technical standards (RTS). These RTS specify what constitutes an equivalent legal mechanism to ensure that a residential property under construction is completed within a reasonable timeframe, for the purposes of risk-weighting requirements under the Capital Requirements Regulation (CRR). The EBA is resisting the EC' proposal to increase the cap on the risk weight applicable to the protection provider from 20% to 30% under the standardised approach, arguing the 20% threshold represents a core prudential safeguard. It also recommends reinstating the requirement that the completion guarantee be required by the law of the Member State where the residential property is being built. In addition, the opinion provides targeted comments on certain drafting changes introduced by the EC, including the treatment of intragroup arrangements and specific provisions relating to enforceability and force majeure. A revised version of the draft RTS reflecting the EBA's recommended drafting adjustments is set out in Annex I to the opinion. The EBA notes that it remains committed to working constructively with the EC to ensure the timely adoption of a robust and legally sound framework.

The Financial Services and Markets Act 2023 (Commencement No 13) Regulations 2026 were made, following HM Treasury's policy response on applying the Financial Services and Markets Act 2000 model of regulation to the UK Capital Requirements Regulation. The regulations effect the revocation of Articles 4, 4A, 4B and 5 of the UK Capital Requirements Regulation (CRR) on 1 January 2027, by virtue of section 1(1) of, and Schedule 1 to, FSMA 2023. The Articles set to be revoked provide for definitions of terms used in the CRR which will be restated in the Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026 (except for the definition of "IFPR financial institution" which will be restated in a separate statutory instrument providing for consequential amendments later this year) and PRA rules. Some definitions in Article 4 were already set to be revoked on 1 January 2027 by virtue of the Financial Services and Markets Act 2023 (Commencement No. 12 and Saving Provisions) Regulations 2026.

The European Banking Authority (EBA) has announced that given the extensive work already carried out, it will not prioritise the monitoring of legacy instruments, while maintaining its review of the quality of own funds and eligible liabilities. The EBA is confident that competent authorities will continue to monitor the remaining limited and specific cases on the basis of the guidance provided, including in its opinion on the prudential treatment of legacy instruments and its opinion on legacy instruments: outcome of its implementation.

The Basel Committee on Banking Supervision (BCBS) has issued a press release following its virtual meeting on 24–25 February, at which it discussed recent market developments and the global banking outlook. With respect to vulnerabilities in government bond‑backed repo markets, the BCBS notes that the implementation of its finalised counterparty credit risk management guidelines, particularly in relation to securities financing transactions and collateral management, should help mitigate these risks but it will monitor implementation progress. Regarding the expedited targeted review of the prudential standards for banks' cryptoasset exposures, an update on progress will be provided later in the year. The BCBS has approved a technical amendment to the standardised approach to operational risk, following its previous consultation, and a response to a frequently asked question on the market risk framework. Both will be published in March.

The UK Prudential Regulation Authority (PRA) has published policy statement PS5/26, finalising amendments to its framework for credit unions wishing to invest in credit union service organisations (CUSOs). Following its June 2025 consultation, the PRA largely finalised its policy as consulted on, including: (i) amending the Credit Unions Part of the PRA Rulebook to clarify that credit unions may invest in CUSOs; (ii) updating Supervisory Statement (SS)2/23 to add a new chapter setting out expectations for credit unions that invest in or use CUSOs; and (iii) making consequential changes to chapter 17 of SS2/23 following the deletion of SS20/15.

The PRA has also made targeted changes in response to feedback including:

• Amending the credit union investment rules to provide that credit unions may invest in CUSOs that serve other UK-regulated mutuals (those with a Part 4A permission).
• Clarifying that a credit union may partner with non-credit unions to own a CUSO. 
• Introducing safeguards to ensure the risks associated with the expansion of CUSO scope in this way are managed.
• Increasing the maximum investment that a credit union can make in a CUSO from 5% to 7.5% of its capital, together with clarifications on the practical application of the limit.

The rule changes took effect on 20 February, with the new supervisory expectations in the new chapter of SS2/23 applying from 20 August, allowing a six‑month implementation period.

The UK Prudential Regulation Authority (PRA) has published consultation paper CP3/26 setting out proposed amendments to the PRA Rulebook to accommodate HM Treasury's (HMT) planned overseas prudential requirements regime (OPRR), which will restate and modify certain existing Capital Requirements Regulation (CRR) equivalence provisions in UK legislation. HMT consulted on the creation of the regime in July 2025 and published its response on the same day, and in parallel to the PRA's consultation. The PRA's proposals are intended to ensure alignment between the PRA Rulebook and the OPRR framework, while largely preserving existing prudential outcomes and imposing no material additional costs on firms. Key changes include targeted amendments across multiple CRR-related parts of the Rulebook (including credit risk, market risk, securitisation and reporting) to clarify the treatment of exposures to overseas institutions and covered bonds following HMT designation decisions under the OPRR. The PRA also proposes minor consequential changes to Statement of Policy 5/15 on Pillar 2 capital. The deadline for responses is 2 April. The proposed changes are expected to take effect alongside other elements of the Basel 3.1 package on 1 January 2027.

HM Treasury (HMT) has published a policy update response on applying the Financial Services and Markets Act 2000 model of regulation to the UK Capital Requirements Regulation (UK CRR), following its July 2025 consultation on Basel 3.1, the overseas recognition regimes and key UK CRR definitions. In this response, HMT broadly maintains its proposed approach while making targeted clarifications in response to feedback.

On Basel 3.1, HMT notes support for facilitating the UK Prudential Regulation Authority's (PRA) delayed implementation of aspects of Basel 3.1 and reiterates that the legislative framework is intended to support the PRA's firm‑facing rules, while committing to clearer communication and coordination of timelines across the wider FSMA transition.

HMT will establish the overseas prudential requirements regime (OPRR) to restate existing equivalence decisions made under the UK CRR equivalence regimes so that jurisdictions currently deemed equivalent are treated as designated. It will also introduce a new power through the OPRR to designate jurisdictions for overseas covered bonds, with current liquidity treatment maintained in the short term while further prudential changes are explored with the PRA. Alongside this response, the draft regulations are published for the OPRR, on which HMT seeks views by 2 April.

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The UK Prudential Regulation Authority (PRA) has published an updated webpage for banks, building societies and investment firms, notifying it has published an updated Branch Return Excel form and schema to align with changes introduced in PS6/25.This policy statement introduced updates to Supervisory Statement 5/21 (SS5/21) and branch reporting requirements for international firms operating in the UK. The changes are effective from 1 March and so the updated form must be used from reporting reference date 30 June. The PRA has also published a common problems document, as well as an updated version of the Branch Return Q&A, which now includes additional clarifications on completing the whole firm liquidity data section of the return and addressing firms' queries on remote booking. 

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The European Banking Authority (EBA) has published final guidelines on proportionate retail diversification methods under Article 123(1) of the Capital Requirements Regulation (CRR). The guidelines seek to establish a harmonised and more proportionate framework for assessing whether retail portfolios qualify for the preferential 75% risk weight for retail exposures under the standardised approach for credit risk. Under Basel III, a baseline granularity benchmark of 0.2% applies, meaning that retail portfolios are sufficiently granular if no aggregate exposure to a single counterparty or group of connected clients exceeds 0.2% of the overall retail portfolio.

The 2024 consultation presented two alternatives for assessing diversification, and the final guidelines confirm the adoption of the "one-step" approach, on the grounds that it is more proportionate and less burdensome than the iterative method that was also proposed. The consultation originally proposed a diversification threshold of 5%, which has been raised to 10%. This means that institutions may exceed the baseline provided that no more than 10% of the eligible retail portfolio exceeds the 0.2% benchmark. The EBA confirmed that it increased the threshold in its final guidelines to ease the impact on small and medium-sized institutions.

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The European Commission (EC) has launched a consultation and call for evidence on the competitiveness of the EU banking sector under its Savings and Investments Union strategy. The purpose of the consultation and call for evidence is to collect feedback on the EU banking sector's competitiveness and on how the EU's regulatory and supervisory framework can be improved.

The EC explains that persistent regulatory and supervisory fragmentation, including differences in national implementation, the involvement of multiple authorities both at EU and national level, and barriers that constrain an efficient allocation of capital and liquidity across the EU are limiting the competitiveness of EU banks. This presents obstacles to banks operating across borders, resulting in sub-scale business models, higher costs and an uneven playing field compared to global peers. The EC highlights the lack of progress on structural features of the banking union as being regularly identified as one of the main factors holding back banks' competitiveness and further integration of the single market.

The consultation seeks feedback on three main areas: (i) banking competitiveness in the EU and globally; (ii) the single market and the banking union; and (iii) complexity and effectiveness of the regulatory framework.

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The European Banking Authority (EBA) has launched a discussion paper on the simplification and assessment of the credit risk framework. The discussion paper presents preliminary ideas to streamline and improve the usability, efficiency and coherence of the existing credit risk rules, particularly given the significant number of mandates accumulated under the EU Banking Package. The EBA's 2025 report sets out principles to assess and strengthen the simplicity and efficiency of the regulatory and supervisory framework and recommends that the EBA conducts a comprehensive review of both the new flow of mandates (i.e. those not yet issued for consultation) and the existing stock (current products from the Single Rulebook). The discussion paper focuses on credit risk as a priority area given the significant accumulation of mandates and considers how a systematic review of these mandates could be organised, to ensure that the EBA's future work better supports efficiency and simplicity.

The discussion paper explores potential policy simplifications, consolidation of existing regulatory products and greater alignment of key definitions to enhance navigability of credit risk outputs. It also identifies challenges within specific mandates and suggests methodological improvements for future mandated reports under the Capital Requirements Regulation. The deadline for comments is 10 May.

The UK Prudential Regulation Authority (PRA) has published discussion paper DP1/26, outlining its proposed reforms to banking regulatory data under the Future Banking Data (FBD) programme. The FBD programme aims to deliver tangible cost reduction for banks in line with the PRA's secondary competitiveness and growth objective, as well as improvements to the relevance, quality and timeliness of data collection. The PRA is aware that while regulatory data are essential for its supervision, financial stability, policymaking and stress testing, current reporting imposes significant cost and complexity on firms. Therefore, while the PRA states its current approach already aims to be proportionate, it notes there are areas which can be further streamlined.

Building on initial template deletions implemented from PS27/25 in December 2025, the PRA proposes a programme of further incremental, proportionate reforms guided by four principles: (i) ensuring data collections are objectives driven; (ii) reducing duplication through a "collect once and well" approach; (iii) making it easier for firms to supply data; and (iv) ensuring data remain fit for purpose over time. The PRA identifies potential streamlining opportunities across legacy templates, reporting processes, and instructions, and highlights trade‑offs around timeliness, comparability, granularity and international alignment. The deadline for responses to the discussion paper, which will inform a future roadmap for reporting reform, is 5 May.

The European Banking Authority (EBA) has published its draft single programming document (SPD) for 2027–2029, outlining its strategic priorities and resource needs over the three‑year period. The EBA confirms it will focus on implementing new mandates for banking and payments including its oversight role under the Digital Operational Resilience Act, supervision of significant issuers of asset referenced and e money tokens under the Markets in Crypto-Assets Regulation and validation of initial margin models under the amended European Market Infrastructure Regulation (EMIR 3). The EBA will also focus on addressing emerging risks arising from geopolitical instability. This will require new approaches to risk assessment, financial stability monitoring and consumer protection. Supporting EU co legislators also remains central for the EBA as the SPD reflects the priorities for the financial sector and aims to keep the financial system strong while also ensuring it can fund the European economy.

Against this backdrop, the EBA identifies three strategic priorities for 2027–2029: (i) evolving and simplifying the Single Rulebook for banking and financial services; (ii) carrying out risk assessments to support effective risk analysis, supervision and oversight; and (iii) embracing innovation to enhance technological capacity across the sector. The EBA notes that close cooperation with relevant EU and third-country authorities will be required to meet its objectives.

The European Banking Authority (EBA) has published a consultation paper proposing updates to existing guidelines (EBA/GL/2020/13) on the use of systemic risk buffers (SyRB) to address climate-related and broader environmental risks under Article 133 of the Capital Requirements Directive (CRD), as amended by CRD VI (Directive (EU) 2024/1619). The EBA notes that climate risks, both transition and physical, are expected to have a material impact on individual institutions and the wider financial system. Article 133 permits relevant authorities to apply a SyRB where climate related risks could have serious negative consequences for the financial system and the real economy. The current guidelines, published in 2020, were not designed to target exposures subject to climate risk. The consultation therefore proposes revisions to enable SyRB measures to better capture climate risks of both types. It also incorporates some changes based on lessons learned from national authorities that have previously implemented SyRB measures, with the aim of improving their design and monitoring. The guidelines are expected to be finalised by mid-2026 and are expected to apply six months after publication. The deadline for comments is 30 April.

The European Banking Authority (EBA) has announced the launch of its Pillar 3 data hub, a new harmonised digital platform which, for the first time, provides public access to prudential information from all EEA credit institutions in a single location. The hub offers users access to official data alongside a tool to enable comparisons across institutions, reference dates and other dimensions. Bulk data downloads are also available.

The EBA expects the full data set for the first three reference dates (June, September and December 2025) to be available by June this year. In line with transitional arrangements under the final draft implementing technical standards published in February 2025, institutions must now submit, via the platform, the Pillar 3 reports for the 2025 reference date already published on their own websites. The transition period enables institutions to familiarise themselves with the platform and submission process, before moving to the steady state. The EBA has provided a comprehensive user guide covering all features of the Pillar 3 data hub.

The European Banking Authority (EBA) has published its second-phase report outlining the medium- to long‑term objectives of the Interest Rate Risk in the Banking Book (IRRBB) heatmap, including key recommendations for institutions and supervisors. The report completes the heatmap milestones launched after the scrutiny of the IRRBB standards and builds on the guidance reflected in the first-phase implementation report published in February 2025.

This second-phase report provides analytical findings and recommendations in four priority areas:

• Application of the 5-year cap on the repricing maturity of non-maturity deposits (NMD) – this continues to serve as a harmonising benchmark with limited impact observed so far. Institutions that seek a longer horizon should demonstrate, within their Internal Measurement System (IMS), how such treatment better reflects product characteristics or client behaviour, substantiate it with historical evidence and integrate it into hedging practice, in line with Q&A 2023_6807. Any approved deviation should be disclosed under Pillar 3.

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The European Systemic Risk Board (ESRB) has published a second summary compliance report assessing the implementation of recommendation ESRB/2019/18 on the exchange and collection of information for macro-prudential purposes regarding branches of credit institutions having their head office in another member state or in a third country. The recommendation, issued on 26 September 2019, is divided into three parts (A, B and C):

• Recommendation A, addressed to the relevant authorities, concerns cooperation and the exchange of information on a need-to-know basis for macro prudential and financial stability tasks.
• Recommendation B, addressed to the European Commission, focuses on identifying and removing potential obstacles in European Union legislation that may prevent authorities responsible for macro prudential policy or other financial stability tasks from obtaining the information required on branches to carry out their functions.
• Recommendation C, addressed to the European Banking Authority (EBA), concerns the development of guidelines for monitoring the exchange of information.

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The Financial Services and Markets Act 2023 (Commencement No. 12 and Saving Provisions) Regulations 2026 have been published. The Regulations, which were made on 13 January, use powers under the Financial Services and Markets Act 2023 (FSMA 2023) to revoke provisions in the UK Capital Requirements Regulation (UK CRR) and related legislation. They also make saving provisions relating to some of the revoked provisions The Regulations continue the process of revoking certain pieces of retained EU law relating to financial services and restating them into UK domestic law, including through regulator-made rules. You may like to read our article "A boost for UK Financial Services" for further information.

Specifically:

• Regulation 2 revokes, on 1 July, certain provisions of Commission Implementing Regulation (EU) 2016/1646 concerning main indices and recognised exchanges for the purposes of the CRR.
• Regulation 3 revokes, on 1 January 2027, further provisions of the CRR on prudential requirements for credit institutions and investment firms, and related instruments.
• Regulations 4 and 5 include extensive saving provisions ensuring continuity for firms by preserving permissions granted under revoked CRR provisions, so that from 1 January 2027 they continue to have effect as permissions under section 138BA FSMA 2000 or the equivalent UK Prudential Regulation Authority (PRA) rules. They also include specific rules applying separately to small domestic deposit takers (SDDTs), SDDT consolidation entities and non-SDDT firms.

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The UK Prudential Regulation Authority (PRA) has published policy statement PS3/26, setting out the final rules that restate the remaining provisions of the UK Capital Requirements Regulation (CRR) within the PRA Rulebook and associated supervisory materials. Specifically, in this policy statement, the PRA confirms that the near‑final rules issued in PS19/25 (following the 2024 consultation paper CP13/24) have been adopted with only minor, non‑substantive amendments. These amendments include updates required to align with the PRA's final Basel 3.1 rules and the replacement of certain CRR definitions, such as probability of default, loss given default and conversion factor, with new PRA Rulebook glossary definitions. The final rules, together with the associated supervisory statements and statements of policy contained within the appendices, will apply from 1 January 2027. This aligns with the implementation date of Basel 3.1 in the UK.

Alongside this policy statement, the PRA also published final policy, rules and supervisory expectations relating to Basel 3.1 implementation, retiring the Pillar 2A refined methodology and the final simplified capital regime for SDDTs.

The UK Prudential Regulation Authority (PRA) has published policy statement PS2/26, finalising its decision to retire the "refined methodology" for Pillar 2A. Alongside this policy statement, the PRA also published final policy, rules and supervisory expectations relating to Basel 3.1 implementation (see updates above and below). Specifically, in this policy statement, the PRA confirms that no changes have been made between the near‑final policy issued in PS18/25 and the final policy, and it will proceed with clarifications to its Pillar 2A approaches for interest rate risk in the banking book and pension obligation risk. The PRA reiterates that the refined methodology will cease to apply from 1 January 2027, aligning with the implementation date of UK's Basel 3.1 standards and the introduction of the simplified capital regime for small domestic deposit takers (SDDTs). From 2027, all firms, including SDDTs, will calculate capital requirements under the Basel 3.1 standardised credit risk approach, rendering the refined methodology obsolete. The appendix to this final policy statement includes corresponding amendments to supervisory statement SS31/15 (on the internal capital adequacy assessment process and the supervisory review and evaluation process), which will also apply from 1 January 2027.

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The UK Prudential Regulation Authority (PRA) has published a final policy statement PS4/26, finalising the simplified capital regime and additional liquidity simplifications for small domestic deposit takers (SDDTs) and SDDT consolidation entities under the strong and simple framework. The regime for SDDTs, a layer of prudential regulation that will apply to the smallest banks and building societies, has been developed in two phases: Phase 1, which focused on liquidity and disclosure simplifications and was finalised in December 2023; and Phase 2, outlined in the 2025 near-final policy statement and which built on Phase 1 and incorporated feedback from the 2024 consultation.

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The UK Prudential Regulation Authority (PRA) has published final policy statement PS1/26 on the implementation of the Basel 3.1 standards in the UK, together with associated supervisory statements, statements of policy and updated disclosure and reporting templates in the relevant appendices. Specifically, in this policy statement, the PRA confirms: (i) its one‑year deferral of Basel 3.1 to 1 January 2027 (with the Fundamental Review of the Trading Book internal model approach deferred to 1 January 2028); and (ii) finalises targeted amendments consulted on in 2025, including changes to the market risk framework, clarifications to credit risk, operational risk and output floor provisions, the replacement of certain Capital Requirement Regulation (CRR) definitions (such as probability of default, loss given default and conversion factor) with new PRA Rulebook glossary definitions and the revocation of residual CRR provisions via HM Treasury commencement regulations. 

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The UK Prudential Regulatory Authority (PRA) has published Dear CEO letters setting out its 2026 supervisory priorities for UK deposit takers and international banks and designated investment firms. Across both letters, the PRA highlights its continued focus and expectations across risk management, operational resilience, financial resilience and data governance. It states that these priorities should be considered alongside firm-specific feedback provided though a firm's recent periodic summary meeting (PSM). It also announced plans to move certain supervisory activity, including PSMs, to a two-year cycle. The letters explain that a firm's supervisory contact will provide details in due course of what this means for the timing of the firm's next PSM.

The European Central Bank (ECB) has published its staff contribution to the European Commission's (EC) targeted consultation on the application of the market risk prudential framework (FRTB). The ECB welcomes the proposal to have the FRTB enter into force in the EU on 1 January 2027. It argues that further delaying the implementation of the FRTB would come with clear costs from a risk management and operational perspective. The ECB favours the three-year period of stability in the applicable market risk framework proposed by the EC. With respect to the temporary measures proposed for the delegated act, the ECB believes there is room to make these proposed amendments more risk-based and sound without adversely affecting the EC's objective of maintaining a level playing field with other jurisdictions. Regarding internal model-related requirements, the ECB agrees with using the Profit and Loss Attribution Test (PLAT) as a monitoring tool only, on the understanding that banks work on remediation in the event of highly concerning results. It considers the measures regarding the Risk Factor Eligibility Test (RFET) could be too far-reaching in their current form and would prefer this relief measure be limited to new risk factors. Equally, with regard to collective investment undertakings (CIUs), the ECB continues to consider that the proposal allowing banks to carry out the look-through on a quarterly basis for material exposures under both FRTB-AIMA and FRTB-ASA, rather than on a weekly basis as currently foreseen in the Capital Requirements Regulation, would not be sufficient to adequately capture the underlying risks of CIU exposures.

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The European Banking Authority (EBA) has published its final guidelines on ancillary services undertakings. It specifies criteria for identifying activities referred to in Article 4(1)(18) of the Capital Requirements Regulation (CRR), which was amended by Regulation 2024/1623 (CRR III), to clarify the definition of ancillary services undertaking. The guidelines define how to identify: (a) activities that should be considered a "direct extension of banking"; (b) activities that should be considered "ancillary to banking"; and (c) "other similar activities" that the EBA may consider similar to those referred to in the CRR.

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The European Supervisory Authorities (ESAs, comprising the European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) has published a final report with joint guidelines for integrating environmental, social and governance (ESG) risks into financial stress tests for banks and insurers. These guidelines, mandated by the Capital Requirements Directive (CRD) and the Solvency II Directive, aim to harmonise how competent authorities across the EU consistently incorporate ESG risks into their supervisory frameworks.

Following feedback to the June consultation, the ESAs refined the drafting but did not change the overall structure or approach. Notable amendments include: clarifying the materiality assessment to make it more forward looking and not limited to relative exposure measures; enhancing proportionality language; increasing the time horizon to 10 years for or a more forward looking and comprehensive materiality assessment of ESG risks for competent authorities to identify; and other minor adjustments. The guidelines will be translated into all official languages of the EU in Q1 and published on the ESAs' websites. The deadline for competent authorities to notify the respective ESA whether they comply or intend to comply with the guidelines will be two months after the publication of the translated guidelines. The joint guidelines apply from 1 January 2027.

The European Banking Authority (EBA) has published two final draft RTS under the Capital Requirements Directive 2013/36 (CRD IV), as amended by Directive 2024/1619 (CRD VI), relating to the regulatory requirements for third-country branches (TCBs). The RTS relate to: (i) cooperation and colleges of supervisors for TCBs; and (ii) the booking arrangements that TCBs are to apply. The revised drafts consider feedback from the July consultations, in particular:

• The draft RTS on supervisory cooperation contains a revised Article 14 on the information to be exchanged on the supervisory review and evaluation process (SREP). The elements of information to be exchanged are linked to the relevant provisions of CRD in order to accommodate future developments at the level of the SREP Guidelines (a revised version of which is currently under consultation). 

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The UK Prudential Regulation Authority (PRA) has published a new webpage outlining its expectations of firms' when including interim or year‑end profits in Common Equity Tier 1 (CET1) capital. Under Article 26(2), Chapter 3 of the Own Funds (CRR) Part of the PRA Rulebook, firms must notify the PRA as soon as practicable when including interim or year-end profits in CET1 capital, unless a formal decision has been taken confirming the final profit or loss for the year (e.g., by the board or AGM). Losses must be deducted in full as soon as they are incurred and do not require notification.

When notifying, firms are expected to demonstrate that profits have been independently verified and that any foreseeable charge or dividend has been deducted. Notifications must specify whether they apply on an individual basis, a consolidated basis, or both. The PRA emphasises that receipt of a notification does not constitute approval of CET1 eligibility and firms themselves remain responsible for compliance with all applicable requirements regarding the quality of capital. If any information provided changes, firms must inform their PRA supervisory contact and submit a new notification as soon as possible. Firms are also reminded to notify the PRA each time they wish to count interim or year-end profits as CET1 capital in a financial year.

The UK Prudential Regulatory Authority (PRA) has finalised a series of what it refers to as low impact amendments (LIAF03/25) to its Rulebook and policy materials following its October consultation. These include:

• The conditional disapplication of certain PRA general provisions to implement the deference arrangements under the UK Swiss-Berne Financial Services Agreement, effective from 1 January.
• A minor technical amendment to the Transitional Measure on Technical Provisions Part of the PRA Rulebook, TMTP Calculation and Rule 5.2, which all took effect from 23 December.
• An amendment to the Insurance Special Purpose Vehicle Part of the PRA Rulebook, solvency requirements, Rule 2.2A(3) and related updates to supervisory statement SS2/25, which all took effect and applied from 23 December.
• Miscellaneous corrections across the PRA Rulebook to ensure its accuracy, effective from 1 January.

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Guideline (EU) 2025/2595 of the European Central Bank (ECB) has been published in the Official Journal of the European Union. The guideline, adopted on 10 December, sets out a harmonised supervisory approach for national competent authorities (NCAs) to assess the management and coverage of non performing exposures (NPEs) held by less significant institutions (LSIs) within the Single Supervisory Mechanism. It aims to ensure consistent supervisory standards across member states by requiring NCAs to review LSIs’ provisioning policies and treatment of assets in terms of own funds requirements. Such data is not currently included in the information that institutions are required to report under Commission Implementing Regulation (EU) 2021/451, and therefore NCAs should require LSIs to report it for each relevant reporting reference date. NCAs must: assess NPE coverage using Article 47c factors under the Capital Requirements Regulation; apply the framework to all LSIs unless specific exemption conditions are met; and introduce reporting requirements for each reporting reference date using ECB developed templates. Transitional reduced coverage factors apply for the 2025–2027 reporting periods, with full application from the 31 December 2028 reference date. The guideline takes effect on the day of its notification to the NCAs of the participating member states.

The European Banking Authority (EBA) has published a letter sent to the European Commission (EC) with the outcome of its EU AI Act mapping exercise. In January 2025, the EBA established a dedicated workstream to map the requirements on high-risk AI systems under the EU AI Act against relevant provisions in EU banking and payments regulation, with a focus on the use of AI for creditworthiness and credit scoring. The EBA confirms that, although the EU AI Act identifies overlaps between some requirements on high-risk AI systems and EU financial sector law and envisages targeted derogations and other ways to address this (such as integration or combination of requirements), it does not envisage such derogations for other requirements on high-risk AI systems (e.g. human oversight, data governance, cybersecurity) which are already widely regulated under EU financial services law.

The EBA highlights that the Digital Operational Resilience Act framework extensively covers the cybersecurity and business continuity requirements set out in the EU AI Act and that the Capital Requirements Regulation and Capital Requirements Directive IV requirements already provide a comprehensive and technology-neutral governance and risk management framework that can be applied to supervising the use of AI tools. The EBA sets out in an annex to its letter, a table identifying how EU financial services law already addresses relevant EU AI Act requirements. The EBA believes the table will be useful to the EC when producing the guidelines under Article 96(1)(e) of the EU AI Act on the interplay between the EU AI Act and EU financial services law and managing any regulatory overlaps.

The Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025 have been published, accompanied by an explanatory memorandum. This follows the draft version of the Regulations which were laid before the UK Parliament in October. The Regulations are part of the UK's continued process to repeal and replace assimilated EU financial services law following Brexit under the Financial Services and Markets Act 2023 (FSMA 2023). Under section 1 of FSMA 2023, several provisions of the UK Capital Requirements Regulation (UK CRR) will be revoked, effective from 1 January 2026, by virtue of the FSMA 2023 (Commencement No. 10 and Saving Provisions) Regulations 2025. These provisions, which set prudential standards for credit institutions and investment firms, will largely be replaced by rules made by the UK Prudential Regulation Authority (PRA) and the Bank of England.

The Regulations make consequential technical amendments to UK legislation following the revocation of certain provisions of the UK Capital Requirements Regulation (CRR) relating to the definition of capital and total loss absorbing capacity (TLAC) requirements. The Regulations amend: (i) Section 3 of the Banking Act 2009; (ii) Articles 64(2) and 68(2) of the Bank Recovery and Resolution (No 2) Order 2014; (iii) Regulation 7(6) of the Financial Conglomerates and Other Financial Groups (Amendment. etc.) (EU Exit) Regulations 2019; and (iv) the definition of relevant requirement in Regulation 2 of the Bank Levy (Loss Absorbing Instruments) Regulations 2020. The Regulations come into force on 1 January 2026.

The UK Financial Conduct Authority (FCA) has published an engagement paper launching a review of market risk capital requirements for FCA investment firms. The IFPR sets specific prudential requirements for FCA investment firms, including rules on how much capital they must hold to cover potential losses from investments. These requirements are currently based on the UK Capital Requirements Regulation (UK CRR), which was originally designed for banks. The FCA notes that the harm caused by an investment firm failing may be less than that of a bank, suggesting scope for more proportionate capital rules.

The review will focus primarily on the current requirements in the FCA's prudential MIFIDPRU sourcebook specifically sections 4.11 (trading book and dealing on own account: general provisions), 4.12 (K-NPR requirement), and 4.13 (K-CMG requirement), as well as the corresponding sections of the UK CRR as it stood on 31 December 2021.

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The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) on the threshold of activity at which designated credit institutions and central securities depositories (CSDs) providing 'banking-type ancillary services' to a designating CSD must comply with the prudential risk management requirements set out in Articles 54(4) and 54(4a) of the Central Securities Depositories Regulation (CSDR). Banking-type ancillary services include activities such as providing cash accounts to, and accepting deposits from, participants in a securities settlement system, and payment services involving the processing of cash and foreign exchange transactions. The draft RTS were consulted on in March, following which, only minimal changes have been made.

Key provisions in the draft RTS include: (i) a minimum threshold set at EUR3.75 billion and 1.5% of annual settlement volume, while the maximum threshold is EUR6.25bn and 2.5% of annual settlement volume; (ii) introducing a dynamic threshold that adjusts according to the risk profile of both the designating CSD and the designated credit institution, with a corresponding increase in prudential and risk management requirements as activity levels rise; and (iii) accompanying risk management and prudential measures which are proportionate to the threshold.

The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) on the treatment of structural foreign exchange (FX) positions under the Capital Requirements Regulation (CRR). The draft RTS, developed under Article 104c of the CRR (inserted by the CRR III), build on the EBA's 2020 guidelines and were consulted on in October 2024. Most provisions from the existing EBA 2020 guidelines are retained, with a few notable changes including: (i) allowing institutions to consider only credit risk own funds requirements when determining the maximum open position that neutralises sensitivity to capital ratios, where credit risk is the main driver of ratio variability; (ii) providing further guidance on how institutions should remove FX risk positions from own funds requirements; and (iii) introducing dedicated provisions for currencies that are illiquid in the market, including those impacted by EU restrictive measures. The final draft RTS will be submitted to the European Commission for endorsement, following which they will enter into force on the 20th day following publication in the Official Journal of the European Union.

The European Central Bank (ECB) has announced it will conduct a geopolitical risk reverse stress test on 110 directly supervised banks in the Single Supervisory Mechanism in 2026. In a reverse stress test, a pre-defined outcome is set, and each bank defines the scenario in which that outcome would materialise. This exercise will complement the 2025 EBA stress test, which applied a common scenario for all banks and resulted in varying differences in their capital depletion. The 2026 stress test will focus on how geopolitical risk could affect banks' business models, who should identify relevant geopolitical events and quantify their impact. Additionally, the banks will be asked to describe how they would act to reduce that impact, if necessary, with a view to ensuring that they have robust governance and operational resilience frameworks in place.

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The Financial Services Regulatory Initiatives Forum has published the ninth edition of the Regulatory Initiatives Grid. This sets out the regulatory pipeline for the next two years, outlining 124 live initiatives which is a 13% reduction since the last grid was published. Key priorities include implementing Basel 3.1 standards, advancing the strong and simple prudential framework and reforms to the prospectus regime and wholesale markets review. Innovation-focused measures cover stablecoin regulation, the national payments vision, and development of a UK captive insurance regime, while consumer-focused reforms include the advice guidance boundary review and regulation of buy now pay later products. The Grid also highlights efforts to streamline regulatory processes, with 45 joint initiatives across sectors, and provides indicative timelines for consultations and implementation through 2027. Separate press releases announcing the Grid have also been published by the UK Financial Conduct Authority and the Bank of England.