The European Banking Authority (EBA) has published a consultation paper on draft implementing technical standards (ITS) for the supervisory reporting of third-country branches under the Capital Requirements Directive (CRD VI). The proposals aim to bring consistency to reporting formats, definitions and frequencies across the EU, while also strengthening oversight of third-country branches. To achieve this, the EBA is introducing structured data collection with new templates that capture information on both the branches and their head undertakings. This is intended to address the inconsistencies in national approaches currently in place and ensure supervisors have a clearer view of the financial health, risk profile and group dependencies of these entities.

Read more.

The UK Prudential Regulation Authority (PRA) has published discussion paper DP1/25 inviting views on potential reforms to the internal ratings based (IRB) approach to credit risk for residential mortgage exposures. The PRA recognises that medium-sized firms face challenges in developing compliant models for loss given default (LGD) and probability of default (PD), which may restrict access to the IRB framework and limit competition. To address this, the PRA is considering a new foundation IRB (FIRB) approach under which firms would model PD while applying fixed supervisory values for LGD and exposure at default (EAD). This would provide a proportionate alternative to the standardised approach (SA) and advanced IRB (AIRB) for firms with limited data or modelling capabilities. In parallel, the PRA is also exploring policy options to ease implementation of PD modelling requirements. These include revising or removing the 30% cyclicality calibration cap, simplifying long-run average default rate estimation and exploring through-the-cycle (TtC) models for medium-sized firms. The PRA is not committing to any policy changes at this stage but seeks views by 31 October. Any changes would take effect after the implementation of the near-final Basel 3.1 rules.

The UK Prudential Regulation Authority (PRA) has announced an extension to the consultation period for CP12/25 which sets out Phase 1 of its Pillar 2A review. The consultation was originally published on 22 May. In response to industry feedback that respondents may benefit from extra time, particularly due to other concurrent regulatory consultations that close in early September, the deadline for responses has been extended from 5 September to 30 September. Additionally, the proposed implementation date for changes relating to pension obligation risk and market and counterparty credit risk (Chapters 4 and 5) have been deferred from 2 March 2026 to 1 July 2026. The implementation timeline for credit risk and operational risk proposals (Chapters 2 and 3) remains unchanged, aligned with the Basel 3.1 implementation date of 1 January 2027.

The UK Prudential Regulation Authority (PRA) has published consultation paper CP19/25, proposing the transfer of definitions from Articles 4, 4A, 4B and 5 of the UK Capital Requirements Regulation (CRR) into the PRA Rulebook Glossary. This follows HM Treasury's (HMT) announcement to revoke remaining CRR provisions, aligning with the UK's FSMA model of regulation. The PRA intends to adopt a "lift and shift" approach, restating most definitions without substantive change. However, targeted amendments to improve clarity and reduce regulatory burden are also proposed. Key proposals include updates to definitions such as 'SME', 'large institution' and 'credit risk' terms, among others, introducing new definitions for terms currently implicitly defined in the CRR, as well as consequential amendments across the Rulebook and supervisory statements. The proposed changes are set out in the PRA Rulebook: Definitions and Interpretation (CRR) Instrument [2026] and the draft amendments to Supervisory Statement SS13/13 on Market Risk. The proposal in this consultation also considers the draft Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2025, published by HMT on 15 July and the PRA expects to consider any relevant subsequent legislative proposals and statutory instruments when finalising its approach. The deadline for comments on the consultation is 30 October, with proposed implementation aligned with the Basel 3.1 package, taking effect on 1 January 2027.

The Bank of England (BoE) has published the Financial Policy Committee's (FPC) final response to the 2024 review of the Other Systemically Important Institutions (O-SII) buffer framework. This follows the March consultation, which proposed increasing the O-SII buffer thresholds to reflect the 20% cumulative growth in nominal GDP between 2019 and 2023 and extending the O-SII buffer review cycle from two to three years. In response to consultation feedback, the FPC has made only one adjustment to the indexation period—starting with the O-SII buffer rates set in 2025, a longer indexation period, from 2019 to 2024, will be used to determine future rates. This means the O-SII buffer thresholds will increase by 27%, rather than the 20% proposed in the consultation. To ensure firms benefit without delay, the revised framework takes immediate effect. Looking ahead, the December review of O-SII buffer rates (applicable from 1 January 2027) will use thresholds indexed to nominal GDP data up to end-2024.

The framework has been largely implemented as consulted on, with the UK Prudential Regulation Authority (PRA) reissuing firms' 2024 O-SII buffer rates, using end-2023 balance sheet data and thresholds indexed by 20%, which apply from 1 January 2026.

The European Central Bank (ECB) has published a revised version of its guide to internal models, reflecting updates under the Capital Requirements Regulation (CRR3) and the revised Basel framework. The update enhances transparency around the ECB's interpretation of key regulatory requirements. The main updates include: (i) a newly introduced section outlining supervisory expectations for the use of machine learning in internal models, which aims to ensure that models using these techniques are adequately explainable and that their performance justifies their complexity; (ii) updates to the 'credit risk' chapter refining expectations on roll-out and permanent partial use, internal validation and audit (in line with the EBA's Internal Ratings-Based handbook), default definitions and risk parameter estimation and clarifying senior management responsibilities; (iii) splitting the topic of 'market risk' into two chapters to reflect supervisory expectations under CRR2 and CRR3 frameworks, acknowledging delays in implementing the new Basel standards—initially to 2026, with a further proposed delay to 2027 pending EU scrutiny; and (iv) expanded guidance under the chapter on 'counterparty credit risk' on modelling exposures, trade risks, and maturity adjustments in accordance with CRR3.

The European Central Bank (ECB) has published an updated guide outlining its supervisory stance on the exercise of options and discretions provided for under the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD), in the context of prudential supervision of credit institutions. The guide seeks to provide coherence and transparency on the supervisory policies that will be applied in supervisory processes within the Single Supervisory Mechanism, particularly in supporting joint supervisory teams in their oversight of significant credit institutions. The update takes into account the latest revisions to the EU's CRD and CRR. The ECB has also published a feedback statement. A version of the guide with draft revision marks has also been released to clearly outline the changes made by the ECB in response to the consultation that ended in January.

Read more.

The European Banking Authority (EBA) has published its report under Article 21c(6) of the Capital Requirements Directive VI on whether to amend the provisions governing the direct provision of core banking services from third countries to EU credit institutions and EU financial sector entities (FSEs). In collaboration with the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority, the EBA conducted a quantitative and qualitative assessment to determine whether third-country undertakings should be allowed to provide core banking services directly to EU FSEs in addition to EU credit institutions without establishing a branch in the EU.

Read more.

The European Commission has published a targeted consultation, accompanied by a press release, on a draft communication regarding the prudential treatment of equity investments by banks under legislative programmes in Article 133(5) of the Capital Requirements Regulation (CRR). These programmes, established under EU and national laws, aim to channel both public and private financing into strategic sectors of the economy. The draft communication proposes more favourable capital treatment for banks investing in equities through qualifying public programmes, typically involving public subsidies or guarantees and subject to oversight by public authorities. This means banks would be required to hold less capital against such investments compared to other equity exposures.

Read more.

The UK Prudential Regulation Authority (PRA) has published consultation paper LIAC01/25 proposing a series of low-impact amendments to its Rulebook and policy materials. The deadline for comments on the consultation is 2 September. Separately, under LIAF01/25, the PRA has implemented minor corrections to the Solvency II rules and updated Supervisory Statement SS16/16 (on the minimum requirement for own funds and eligible liabilities related to buffers and threshold conditions) to reflect current practices and remove outdated references. These changes, which did not require consultation, will take effect on 24 July.

Read more.

The UK Prudential Regulation Authority (PRA) has published a policy statement confirming amendments to the large exposures framework in respect of exposures arising from mortgage lending, exposures to the UK FSCS, requirements for G-SIIs and O-SIIs to highly indebted French non-financial corporations. These formed part of the 2024 consultation on the large exposures framework, which also included other topics not covered by this policy statement. The policy statement also confirms amendments in respect of groups of connected clients, as consulted on in 2023.

The PRA had proposed removing the provision allowing firms to reduce exposures by using immovable property on the grounds that immovable property is illiquid and therefore not a reliable mitigant in a stress scenario. The policy statement confirms that this change will proceed. However, in respect of small domestic deposit takers (SDDTs), the PRA has acknowledged feedback that such a change may require revisiting the PRA's strong and simple framework proposal that the PRA would engage with SDDTs for which the sum of their large exposures is above 300% of their tier 1 capital (as part of the C-SREP process).

Read more.

The UK Prudential Regulation Authority (PRA) has published a policy statement outlining the PRA's final policy on the definition of capital (as consulted on in 2024), and on proposals in relation to securitisations and mapping external credit rating agency ratings to credit quality steps (ECAI mapping) (also consulted on last year). The policy statement confirms that the changes in relation to the definition of capital (which included restating the majority of relevant requirements in Part Two of the UK Capital Requirements Regulation) are not substantive, and that additional guidance is included in the new Statement of Policy and in SS7/13 (new version effective from 1 January 2026). On ECAI mapping, the policy statement confirms that the PRA has taken on board feedback in respect of the mapping tables, guidance needed and interaction with the Basel 3.1 standards, and confirms that the mapping tables amendments will come into force on 1 January 2026 (ahead of the PRA's implementation of the Basel 3.1 standards). PRA will publish further consequential amendments on the mapping rules changes in due course. Regarding securitisation supervisory expectations, the PRA confirms that it is making certain changes to SS9/13 to add new expectations that are not dependent on Basel 3.1 implementation, and that a subsequent policy statement will cover those that are dependent on Basel 3.1 implementation. As proposed, the updates to SS9/13 will come into force on 1 January 2026.

HM Treasury (HMT) has published an update to its policy note on applying the Financial Services and Markets Act 2000 model of regulation to the UK Capital Requirements Regulation (UK CRR). An earlier version of the policy note was originally published in 2024. The updated approach includes proposals and commentary on three key topics – Basel 3.1, overseas recognition regimes and key UK CRR definitions.

On overseas recognition regimes, HMT has confirmed it will take a standardised approach, with each piece of legislation setting out the scope, effect, policy outcomes and "matters to consider" when considering whether other jurisdiction's regimes should be designated as recognised. It is seeking specific feedback on the proposed overseas prudential requirements regimes, which would replace the current equivalence regimes in the UK CRR. HMT's intention, in the main, is to carry forward the existing equivalence decisions into the new regime; however, it confirms that the effect of current equivalence decisions would not be preserved for exchanges and there may be additional flexibility where appropriate, as regards certain exposures or activities.

Read more.

HM Treasury (HMT) and the UK Prudential Regulation Authority (PRA) have published updates with proposed changes to the expected implementation of Basel 3.1. The changes relate to delaying the implementation of the new internal model approach under the Fundamental Review of the Trading Book (FRTB-IMA) by a year, and to the advanced standardised approach (ASA) – specifically, the treatment of collective investment undertakings (CIUs) and the application of the residual risk add-on (RRAO) component.

The PRA consultation on adjustments to the Basel 3.1 market risk framework makes four proposals, accompanied by draft updates to rules and guidance set out in various appendices.

• Proposal 1, which proposes to delay FRTB-IMA implementation to 1 January 2028. All other aspects of Basel 3.1 would proceed on 1 January 2027, as would the implementation of the Strong and Simple capital regime. This proposal recognises the challenges and operational complexity faced by firms with varying business models across multiple jurisdictions. In the interim period, firms with existing IMA permissions would retain those permissions, and positions not in scope of those permissions would move to the ASA. Otherwise, positions not in scope of existing IMA permissions would move to the new standardised approaches (whether ASA or simplified standardised approach, in accordance with the near-final market risk rules and related supervisory statement previously published).

Read more.

The Bank of England (BoE) has published a suite of publications in its capacity as the UK's resolution authority, covering significant updates in relation to its approach to setting the minimum requirement for own funds and eligible liabilities (MREL) and preferred resolution strategies, and its approach to assessing resolvability under the resolvability assessment framework (RAF).

On MREL and resolution strategies, the BoE has made a substantive update to the MREL framework, publishing a policy statement confirming the changes and an updated Statement of Policy which will be effective from 1 January 2026. As a high-level summary, key areas of change are set out below.

Read more.

The European Banking Authority (EBA) has published three consultation papers under Directive 2013/36 (CRD IV), as amended by Directive 2024/169 (CRD VI), relating to the regulatory requirements for third country branches (TCBs). In particular relating to cooperation and colleges of supervisors for TCBs, the booking arrangements that TCBs are to apply, and instruments available for TCBs for unrestricted and immediate use to cover risks or losses.

Read more.

The European Banking Authority (EBA) has published a consultation paper proposing amendments to Commission Delegated Regulation (EU) No 241/2014 on 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 (CRR). The assessment timeline to process the applications to reduce own funds and eligible liabilities instruments had been extended the from three to four months, to accommodate more complex evaluations by competent and resolution authorities. However, following a monitoring period and in light of feedback from institutions, the EBA now considers that authorities have gained sufficient experience to process applications more efficiently. As such, the EBA proposes reverting to a three-month timeframe. References to the simplified requirement for liquidation entities, with an MREL set at the loss absorption amount, are also deleted from the RTS. This is to reflect amendments made by Directive 2024/1174 to the Bank Recovery and Resolution Directive, which exclude liquidation entities from the requirement to obtain the prior permission of the resolution authority to affect the call, redemption, repayment or repurchase of liabilities that would meet the eligibility requirements for the MREL. The deadline for comments on the consultation is 9 October following which the EBA will submit the final draft RTS to the European Commission for adoption.

The Bank of England's Financial Policy Committee (FPC) has published its July financial stability report alongside the record of its 27 June meeting. After assessing the risks to the UK financial system, the FPC reports that global financial markets remain vulnerable, with elevated risks stemming from geopolitical tensions, trade fragmentation and sovereign debt pressures.

Read more.

The Prudential Regulation Authority (PRA) has announced it will be reviewing the Loan to Income (LTI) flow limit requirements, following the Financial Policy Committee's (FPC) recommendation, as stated in its July financial stability report. In line with this, the PRA is offering an interim modification by consent, allowing lenders to temporarily disapply the current rule that limits new residential mortgage loans with an LTI ratio of 4.5 or above to 15% of total new lending. Firms opting into the modification must: (i) within one month, submit detailed information on their business plan (including the percentage share of high LTI mortgages expected to be approved in each of the four quarters), risk appetite and risk management frameworks which include details of any planned increase in high LTI lending; and (ii) on a monthly basis, notify the PRA on the volume and share of high LTI mortgage approvals and completions within the previous month, with the first submission covering the preceding three months. Once granted, the modification will remain effective until 30 June 2026, or earlier if the rule is amended or withdrawn as a result of the PRA's review.

Read more.

The UK Prudential Regulation Authority (PRA) and the UK Financial Conduct Authority (FCA) have published joint final policy statement 11/25, finalising amendments to the PRA Rulebook and FCA Guidance (FG25/4) on the de minimis threshold for the Loan to Income (LTI) flow limit in mortgage lending. The LTI flow limit seeks to ensure that mortgage lenders limit the number of new residential mortgage loans made with an LTI ratio at, or greater than, 4.5 to no more than 15% of their total number of new mortgage loans per annum. This final policy statement follows the April consultation proposing to raise the threshold so that the LTI flow limit only applies to lenders issuing residential mortgages in aggregate exceeding GBP150 million per four rolling quarters (an increase from the current threshold of GBP100 million). The policy statement explains that the updated recommendation addresses the impact of inadvertent regulatory tightening due to growth in the UK economy since the threshold was first implemented. The aim is to reduce regulatory burdens on smaller lenders, allowing them to extend more residential mortgages before being subject to the LTI flow limit. The final amendments to the PRA Rulebook and FCA guidance remain consistent with the consultation proposals. The new rules and updated guidance are implemented through the PRA Rulebook: CRR Firms, Non-CRR Firms: Housing (Amendment) Instrument 2025 and will take effect on 11 July.

The European Banking Authority (EBA) has published a consultation paper on its draft guidelines for managing third-party risk with regards to non-ICT related services. The guidelines will revise and update its prior 2019 outsourcing guidelines in line with the Digital Operational Resilience Act (DORA). The guidelines reaffirm that financial entities' management bodies remain fully accountable for all activities, including those outsourced to third-party service providers (TPSPs), particularly when critical or important functions are involved. The guidelines specify steps to be taken for the lifecycle of third-party arrangements, covering risk assessment, due diligence and termination processes, and stress the need for adequate resources to manage associated risks. To promote consistency with DORA, the draft guidelines allow financial institutions to maintain a single unified register for both ICT and non-ICT services, reducing administrative burden by limiting the level of information to be documented. A transitional period of two years is provided for financial entities under the scope of the updated guidelines, to review and amend existing third-party arrangements and update their non-ICT registers accordingly. The deadline for comments on the consultation is 8 October and a virtual public hearing is scheduled for 5 September.

The European Banking Authority (EBA) has published a consultation paper on its draft guidelines on ancillary services undertakings (ASUs) specifying the criteria for the identification of activities referred to in Article 4(1)(18) of the Capital Requirements Regulation (CRR), as amended by CRR III (Regulation 2024/1623). The draft guidelines set the criteria for the identification of: (a) activities that should be considered a "direct extension of banking"; and (b) activities that should be considered "ancillary to banking". They also outline the process to identify activities that the EBA may consider similar to those referred to in the CRR, to ensure that the guidelines remain responsive to emerging sources of risks.

The proper identification of ASUs plays a key role in determining the scope of prudential consolidation for banking groups, thereby enabling institutions to comply with the obligations laid down in the CRR on a consolidated basis. The EBA expects the guidelines to be read in conjunction with Regulation (EU) 2022/676 (regulatory technical standards on methods of prudential consolidation). The deadline for comments on the consultation is 7 October and a virtual public hearing is scheduled for 2 September. The date of application remains to be specified.

The UK Prudential Regulation Authority (PRA) has published its final policy statement in relation to amendments being made to the UK framework on capital buffers. Together with the Capital Buffers and Macro-prudential Measures Regulations 2025 (Capital Buffer Regulations), published in June, the amendments result in some regulatory material on the UK capital buffers framework being removed from the statute book and replaced by PRA policy material. In addition, the PRA has sought to streamline some of its policy materials on capital buffers, to enhance usability and clarity.

Read more.

The European Central Bank (ECB) has published a Memorandum of Understanding (MoU) (dated 27 June) that the ECB has entered into with the European Union's Anti-Money Laundering Authority (AMLA) to enhance cooperation between prudential and anti-money laundering supervision. The MoU establishes practical arrangements for cooperation and information exchange, aiming to enhance supervisory effectiveness, maximise efficiency and avoid duplication of efforts. Under the MoU, the AMLA will directly supervise certain high-risk financial institutions (referred to as "selected obliged entities") that are particularly exposed to cross-border money laundering. These include payment institutions, crypto-asset service providers and, in some cases, banks that also fall under the ECB's prudential supervision. Article 92(3) of the AMLA Regulation requires the AMLA and the ECB to conclude a MoU setting out the practical modalities for cooperation and for exchanging information in the performance of their respective tasks by 27 June.

The European Supervisory Authorities (the European Banking Authority, European Insurance and Occupational Pensions Authority and European Securities Markets Authority—the ESAs) have announced the signing of a multilateral Memorandum of Understanding (MoU) (dated 27 June) with the European Union's Anti-Money Laundering Authority (AMLA). The agreement establishes a framework for effective cooperation and information exchange among the four institutions. The MoU outlines practical arrangements for collaboration, aiming to enhance supervisory convergence across the EU's financial sector. It also seeks to facilitate the sharing of relevant information, promote cross-sectoral learning and support capacity building in areas of mutual interest. The agreement is a key component of the AMLA's broader cooperation framework with the financial sector, as required under Article 91 of the AMLA Regulation, which mandates the conclusion of a multilateral MoU with the ESAs by 27 June.

The European Banking Authority (EBA) has published two consultation papers under the Capital Requirements Regulation (CRR), as amended by the revised Capital Requirements Regulation (CRR III).

The first consultation paper proposes amendments to the guidelines on the application of the definition of default under Article 178 of the CRR.

Key proposals include:

• Maintaining the 1% threshold for the net present value loss in debt restructuring, emphasising the framework's flexibility and alignment with accounting principles.
• Considering a shortened probation period for certain forborne exposures from one year to three months—however this is not incorporated in the draft amended guidelines.

Read more.

The European Banking Authority (EBA) has issued its final guidelines, accompanied by a press release, on the treatment of acquisition, development and construction (ADC) exposures to residential property under Article 126a of the Capital Requirements Regulation (CRR). These guidelines mark the first phase of the EBA's roadmap for implementing credit risk provisions under the EU Banking Package. They clarify the conditions under which institutions may apply a reduced risk weight of 100%, instead of the default 150%, to ADC exposures that meet specific credit risk-mitigating criteria. These conditions include: (i) at least 50% of total contracts must be either pre-sale contracts with a cash deposit of at least 10% of the sale price, pre-lease contracts with a cash deposit equal to or exceeding three times the monthly lease rate, or a combination of sale and lease contracts; and (ii) obligor-contributed equity of at least 25% of the property's value upon completion. This threshold was revised down from 35% following the May 2024 consultation. The guidelines also introduce flexibility for public housing projects by reducing the equity requirement to 20% and broadening the scope of eligible equity to include committed subsidies.

The European Commission (EC) has adopted a Delegated Regulation supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards (RTS) specifying methods for identifying the main risk driver of a position and determining whether a transaction represents a long or short position. The proposed general method to identify the main risk driver hinges on sensitivities defined under the market risk standardised approach (FRTB-SA) or on add-ons defined under the standardised approach for counterparty credit risk (SA-CCR). For the determination of the direction of the positions, the methodology is aligned with the one set out in the technical standards developed in accordance with Article 279a(3), point (b), of the CRR. For relatively simple instruments, such as fixed-rate bonds, floating-rate notes, stocks, forwards, futures, simple swaps and plain vanilla options, a simplified method has also been specified. The Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union.

The European Banking Authority (EBA) has published its spring 2025 risk assessment report alongside a press release, outlining key developments and emerging risks within the European Union/European Economic Area (EU/EEA). The report highlights, among other things:

• Strong capital and liquidity positions across EU/EEA banks, with profitability remaining at historically high levels, although increased uncertainty and financial market volatility could challenge the sustainability of this.
• Rising credit risks, particularly in sectors vulnerable to geopolitical tensions, tariffs and supply chain disruptions.
• Elevated operational risks, driven by increasing cyber threats and a surge in fraudulent activities.
• Shifts in funding strategies, with banks relying more on deposits and secured debt to support asset growth.
• Exposure to climate-related risks, both transitional and physical, with significant variation across institutions and jurisdictions.

The report is also accompanied by a spring risk assessment questionnaire.

The European Supervisory Authorities (the European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) have launched a joint consultation on their joint draft 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. They establish a common framework for designing ESG-related stress testing methodologies and standards, ensuring consistency across the financial sector. They allow authorities to either integrate ESG risks into existing stress testing frameworks or conduct complementary assessments under adverse ESG scenarios, depending on the applicable sectoral legislation. Key elements of the draft guidelines include: (i) detailed guidance on the design and features of ESG stress tests; and (ii) organisational and governance requirements, including sufficient human resources with ESG expertise, data collection and management systems and appropriate timelines for scenario analysis. The guidelines are also designed to be forward-looking, allowing for future methodological advancements and improvements in ESG data availability. The deadline for responses is 19 September, with a public hearing scheduled for 26 August. The guidelines are expected to be finalised by the end of the year and published by 10 January 2026.

Regulation (EU) 2025/1215 of the European Parliament and of the Council of EU of 17 June amending the Capital Requirements Regulation (CRR) in relation to the stable funding factors for securities financing transactions (SFTs) and unsecured transactions with a residual maturity of less than six months, was published in the Official Journal of the European Union. The factors are used to apply the net stable funding requirements under the CRR and, by virtue of article 510(8) of CRR, were due to be increased unless otherwise specified in a legislative act adopted on the basis of a European Commission proposal. However, the current position is instead being maintained to ensure the ongoing efficient functioning of SFTs and collateral markets and to avoid an undue increase in funding costs for credit institutions. The Regulation enters into force on 26 June and applies from 29 June. Under the revised framework, the European Banking Authority will assess and report on the impact of these changes every five years.

The Prudential Regulation Authority (PRA) has published consultation paper CP13/25 proposing amendments to the credit union investment rules to permit investments in credit union service organisations (CUSOs). The proposals would result in changes to the credit unions part of the PRA Rulebook and to supervisory statement (SS) 2/23.

The key proposals are:

• To amend the PRA Rulebook to clarify that credit unions are permitted to invest in CUSOs.
• To introduce a new chapter in SS2/23 to outline the PRA's expectations for credit unions investing in or using CUSOs to manage associated prudential risks.
• To make consequential amendments to chapter 17 of SS2/23 following the PRA's proposed deletion of SS20/15 (on supervising building societies treasury and lending activities).

The deadline for responses is 24 October.

The European Banking Authority (EBA) has published a consultation paper and accompanying press release, on draft regulatory technical standards (RTS) under the Capital Requirements Directive (CRD as amended by CRD IV). The draft RTS specify the minimum information that must be provided to competent authorities when notifying about proposed acquisitions of qualifying holdings in credit institutions. The aim is to standardise the notification process across the EU, ensuring a consistent application against the five assessment criteria set out under CRD.

Read more.

The European Banking Authority (EBA) has published final reports on draft regulatory technical standards (RTS) and draft implementing technical standards (ITS) relating to the revised operational risk framework under the Capital Requirements Regulation (CRR) as amended by the CRR3. The draft RTS and ITS will be submitted to the European Commission (EC) for adoption.

Read more.

The Basel Committee on Banking Supervision (BCBS) has released a framework for the voluntary disclosure of climate-related financial risks, alongside an updated webpage and press release. This framework, which builds on the November 2023 consultative document and forms part of the BCBS's broader efforts to strengthen the resilience of the banking system to climate-related risk, is designed to operate within the Pillar 3 disclosure framework. It aims to enhance financial stability by providing banks with structured guidance for disclosing both qualitative and quantitative climate-related financial risks. While the BCBS agreed for the framework to be voluntary in nature, jurisdictions may choose to implement it domestically. The framework is structured around a series of qualitative tables and quantitative templates.

Read more.

The House of Lords Financial Services Regulation Committee (the Committee) has published a report, alongside a press release, evaluating the progress made by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in supporting growth in the financial services sector and the wider UK economy. The Financial Services and Markets Act 2023 introduced a secondary objective for the regulators focused on international competitiveness and growth. While the Committee acknowledges that this objective has encouraged regulators to consider the broader impact of their actions, it also finds a prevailing culture of risk aversion by the regulators which undermines the objective. It states this contributes to persistent barriers that limit firms' ability to grow, innovate and compete.

The European Commission (EC) has adopted a Delegated Regulation amending Regulation 575/2013 (CRR) regarding the date of the application of market risk prudential requirements. The new market risk requirements were introduced by CRR amendments made by Regulation (EU) 2024/1623, which marked the completion of the second phase of the implementation of the Fundamental Review of the Trading Book (FRTB), part of the Basel 3 international standards. The application date has already been postponed a year to 1 January 2026. However, a further postponement—which would delay application until 1 January 2027—is being proposed to reflect concerns around delays in Basel 3 implementation by other jurisdictions and the potential impact on EU banks. The Delegated Regulation will be scrutinised by the European Parliament and Council for three months (and this period may be extended by a further three months).

The Council of the European Union has announced it has adopted a proposal to amend the Capital Requirements Regulation (CRR) in relation to the stable funding factors for securities financing transactions (SFTs) and unsecured transactions with a residual maturity of less than six months. The factors are used to apply the net stable funding requirements under the CRR, and, by virtue of article 510(8) of CRR, were due to be increased unless otherwise specified in a legislative act adopted on the basis of a European Commission proposal. The original intention of article 510(8) was to increase the factors in line with the international standards agreed by the Basel Committee on Banking Supervision, but allowing for credit institutions to adapt in time, and calibrate appropriately, for the increase, which would have occurred by 28 June. However, the current position is instead being maintained to ensure the ongoing efficient functioning of SFTs and collateral markets and avoid an undue increase in funding costs for credit institutions. The decision to maintain the current position also intends to bolster the EU's competitive position given the decisions made by other jurisdictions (including the UK and the U.S.) to deviate from the Basel III international standards. The adopted amendments mark the final step in the legislative process and will be published in the Official Journal of the European Union, taking effect from 29 June. Under the revised framework, the European Banking Authority will assess and report on the impact of these changes every five years.

The Bank of England (BoE) has published a feedback statement in response to its December 2024 discussion paper on transitioning to a repo-led operating framework. The discussion paper proposed changes to the Sterling Monetary Framework (SMF), aiming to shift towards a repo-led, demand-driven system for supplying central bank reserves, including proposals to adjust the design of the indexed long-term repo (ILTR) facility.

While there was broad support for the overall design of the framework, concerns were raised in the following areas:

• Predictability of ILTR pricing and allocation. The BoE has maintained that the ILTR's current high-level design, as a variable price, variable size auction, strikes an effective balance between flexibility and responsiveness to changing market conditions and predictability for SMF participants.

Read more.

The draft UK Financial Services and Markets Act 2023 (Capital Buffers and Macro-prudential Measures) (Consequential Amendments) Regulations 2025 were laid before the UK parliament and have been published, alongside an explanatory memorandum. This draft instrument has made consequential amendments to legislation following the revocation of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014 (S.I. 2014/894), which have been replaced by the new Capital Buffers and Macro-prudential Measures Regulations 2025 (S.I. 2025/653), coming into force on 31 July. The amendments are intended to ensure consistency across the legislative framework and to support the continued effective operation of the capital buffer regime. Specifically, the amendments made by this instrument includes replacing citations to the 2014 Capital Buffers Regulations with references to the new Capital Buffers and Macro-prudential Measures Regulations. It also removes references to provisions in the 2014 Regulations that are not being carried forward, such as those relating to the Global Systemically Important Institutions buffer, which are no longer applicable under the revised framework.

The Capital Buffers and Macro-prudential Measures Regulations 2025 (SI 2025/653) have been laid before the UK parliament and published, together with an explanatory memorandum. The regulations restate relevant provisions of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014, which are set to be revoked by the Financial Services and Markets Act 2023 with effect from 31st July. This forms part of the UK's process of replacing a large body of detailed and technical financial services regulation which remains in legislation as assimilated law, following the UK's withdrawal from the European Union.

Read more.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/15 on its proposed prudential regime for cryptoasset firms, also accompanied by an updated webpage. This is intended to be read together with CP25/14 on stablecoin issuance and cryptoasset custody, which we discuss here. In this consultation paper, the FCA has proposed prudential rules and guidance for cryptoasset firms, including those issuing qualifying stablecoins and safeguarding qualifying cryptoassets, including stablecoins. The proposals introduce a new prudential regime to be integrated through two new sourcebooks: (i) COREPRU which will initially apply to firms carrying on regulated cryptoasset activities; and (ii) CRYPTOPRU, which will contain other sector-specific requirements for firms doing regulated cryptoasset activities, with these firms referred to as CRYPTOPRU firms.

Read more.

The Economic Governance and EMU Scrutiny Unit has published a study on enhancing EU competitiveness in the banking sector, provided at the request of the European Parliament's Committee on Economic and Monetary Affairs. The study emphasises the importance of a resilient and efficient banking sector for EU competitiveness. Building on its analysis, the study has recommended that, to achieve this, the EU should first prioritise the defragmentation of the banking market, and second, simplify and streamline the prudential framework for banks without compromising resilience.

Read more.

The European Banking Authority (EBA) has issued an opinion (dated 12 May) in response to a notification from the Norwegian Ministry of Finance, regarding its intention to recalibrate the risk weight floor for Norwegian retail residential real estate exposures under Article 458 of Regulation (EU) No 575/2013 of the Capital Requirements Regulation. The opinion was published alongside a press release. The measure, initially introduced on 31 December 2020 and extended until 30 June, will result in the risk weight floor increase from 20% to 25% starting from 1 July and remaining in force until 31 December 2026. It applies to all institutions established in Norway that use the Internal Ratings Based approach to calculate capital requirements for relevant exposures, seeking to address systemic risks arising from high household debt and rising real estate prices. The EBA does support the measure but invites the Ministry of Finance to closely monitor and review it to ensure proportionality and avoid overlaps with other regulatory requirements and measures already in place.

The European Banking Authority (EBA) has published an onboarding plan, together with a press release, for large and other institutions to access and submit information to the new Pillar 3 Data Hub (P3DH)—a centralised platform for public disclosures under the revised Capital Requirements Regulation (CRR3). The onboarding plan includes procedural steps for institutions to follow when submitting Pillar 3 information and outlines a phased-in timeline for the process. The initiative will enable users to explore and visualise disclosures across institutions and over time, making it easier for institutions to benchmark themselves against peers and enhancing market discipline. The P3DH information will be available to the public from December. The EBA has also published a list of FAQs.

The UK Prudential Regulation Authority (PRA) has published a consultation paper (CP12/25) setting out Phase 1 of its Pillar 2A review. This first phase review seeks to address the consequential impact of the near-final PRA rules that would implement the Basel 3.1 standards, as well as proposals to improve information, guidance and transparency for firms and options to reduce the reporting burden in the interests of proportionality.

Read more.

The European Banking Authority (EBA) has published a consultation paper (CP) proposing amendments to Commission Implementing Regulation (EU) 2024/3172 on the EBA Pillar 3 disclosure framework, aligning it with the requirements of revised Capital Requirements Regulation (CRR3) on ESG-related risks, equity exposures and aggregate exposure to shadow banking entities. The CP also seeks to finalise the implementation of prudential disclosure requirements included in the EU banking package published in 2024. Through the amendments, the EBA aims to improve the transparency and consistency of disclosures while also simplifying the reporting process for institutions. The EBA also intends to provide an updated mapping tool to help institutions align Pillar 3 disclosures with supervisory reporting requirements. The deadline for comments to the consultation paper is 22 August. The final ITS are expected to be submitted to the European Commission by Q4 2025.

The Basel Committee on Banking Supervision (BCBS) had met to discuss a range of initiatives, following the GHOS meeting which took place earlier this month. The discussions focused on:

• Recent market developments and the financial stability outlook for the global banking system.
• Progress on efforts to strengthen supervisory effectiveness following the 2023 banking turmoil. An update on the outcome of this work will be published by the end of the year.
• Comments received to the BCBS consultation on third-part risk management in the banking sector. The BCBS has aimed to finalise principles for third-party risk management by the end of 2025.
• The use of technological innovation to make Pillar 3 disclosures more accessible in machine-readable formats. The BCBS plans to consult on this proposal by the end of the year.
• Prioritising the analysis of financial risks from extreme weather events. The BCBS is also mandated to publish the voluntary climate-related financial risk disclosure framework, which will be released in June.

The European Commission (EC) has published a call for advice to the European Banking Authority (EBA) together with a letter from John Berrigan, Directorate-General of Financial Stability, Financial Services and Capital Markets Union (DG FISMA). The EC has asked the EBA to conduct a second benchmarking exercise on national loan enforcement frameworks from a bank creditor perspective, following the initial exercise conducted in 2019–2020. The benchmarking will assess the efficiency of enforcement procedures in terms of recovery rates, time to recovery and judicial costs. The EBA is expected to deliver a preliminary analysis by July, with the final report due by 31 October.

The UK Prudential Regulation Authority (PRA) has published a final policy statement (PS6/25) alongside a press release, finalising the updates to Supervisory Statement 5/21 (SS 5/21) and branch reporting requirements for international firms operating in the UK. In response to feedback on its July 2024 consultation, the PRA has made several adjustments to the draft policy.

Read more.