The European Commission adopted a Delegated Regulation supplementing the Capital Requirements Directive 2013/36/EU, as amended by Directive 2024/1619 (CRD VI), with regard to regulatory technical standards (RTS) specifying the booking arrangements that third-country branches (TCBs) must apply for the purposes of Article 48h CRD. The RTS set out the methodology that TCBs must follow to track and maintain a precise and comprehensive record of all assets and liabilities booked or originated by the TCB, and off-balance sheet items, in each case that arise from transactions on the basis of their authorised activities, transactions that do not require authorisation, intragroup transactions, and transactions entered into on the basis of reverse solicitation of services.

The RTS also specify the minimum information that must be maintained in the registry book, together with information on their associated risks, taking into account the size and complexity of their operations. The Regulation is based on the European Banking Authority's final draft RTS published in January. It will enter into force on the 20th day following publication in the Official Journal of the European Union and will apply from 11 January 2027.

Commission Delegated Regulation (EU) 2026/1221 was published in the Official Journal of the European Union (OJ). The Regulation makes targeted amendments to the EU prudential framework for banks' market risk, specifically the Fundamental Review of the Trading Book (FRTB) under the Capital Requirements Regulation (CRR).

While most Basel III reforms have applied since 1 January 2025, the FRTB has been deferred on several occasions, most recently to 1 January 2027 in response to uncertainty around implementation timelines and potential deviations from the Basel standards in other major jurisdictions.

This Delegated Regulation sets out amendments intended to support a level playing field for EU banks competing internationally in trading activities by offsetting the negative capital impact of the FRTB for a period of three years – until 31 December 2029, in aspects of the framework where deviations in other jurisdictions have been identified or are likely, including:

• The profit and loss attribution test (PLAT): to allow banks to calculate the PLAT only for monitoring purposes during the three-year period, with no direct impact on the own funds requirements.
• The non-modellable risk factors (NMRFs) framework: to modify the conditions on the number of verifiable price observations needed for a risk factor to be considered modellable and hence be capitalised under the expected shortfall calculation.
• Internal default risk model requirements: applying a multiplier equal to 0 to the probability of default of issuers/obligors that attract a 0 % risk-weight under the alternative standardised approach (allowing banks under the internal model approach to treat exposures to those issuers identically to how those exposures would be treated under the alternative standardised approach).
• The expected shortfall risk measure and the stress scenario risk measure calculations: allowing banks under the alternative internal model approach to temporarily calculate and disclose the values of the regulatory expected shortfall risk measure and stress scenario risk measure on a weekly rather than daily basis.
• Exposures to Collective Investment Undertakings: allowing and specifying thresholds for a partial look-through, while requiring a more conservative treatment for the part that cannot be looked through.
• The residual risk add-on (RRAO): applying multipliers for instruments that have future realised volatility as an underlying, that are options that can be exercised on a finite number of dates, or that are options on the difference between two constant maturity swap rates denominated in the same currency, where those instruments attract an RRAO charge only for those reasons.
• Default risk under the alternative standardised approach: recognising economic hedges between an equity derivative and a cash position of the same underlying.
• The output floor: limiting the phase-in of the own funds requirements for market risk under the alternative standardised approach, and allowing banks that apply the simplified standardised approach to similarly benefit from the phase-in.
• Additional proportionality for banks with small trading book businesses: allowing use of the simplified standardised approach for their non-trading book positions subject to foreign exchange risk and commodity risk.
• Limiting capital impacts: allowing credit institutions adversely impacted by the implementation of the new market risk rules, even after applying the targeted amendments, to limit that capital impact for the three-year period.

The Regulation entered into force on 12 September, with the amendments applying from 1 January 2027.

The European Banking Authority has published a letter dated 8 September in response to the European Commission's (EC) decision not to endorse the EBA's final regulatory technical standards (RTS) amending Commission Delegated Regulation (EU) No 241/2014. The draft RTS would have shortened 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. While acknowledging the reasoning behind the EC's decision, the EBA notes that the amendment was intended to address concerns from supervisors and institutions who considered the current timeframe too long. The EBA confirms that it will not resubmit revised draft RTS. Instead, in line with the EC's suggestion, it will pursue a broader review of Delegated Regulation 241/2014, with a view to delivering simplification and efficiency gains.

Two European Commission Regulations supplementing the revised operational risk framework under the Capital Requirements Regulation (CRR) have been published in the Official Journal of the European Union (OJ). Commission Delegated Regulation (EU) 2026/1167 sets out regulatory technical standards (RTS) for calculating operational risk capital requirements, including the composition of the business indicator, items to be included or excluded from that indicator, adjustments relating to events such as mergers and acquisitions, and requirements concerning operational loss data and risk classification. For further detail, please see our previous blog which discusses its adoption in May. In parallel, Commission Implementing Regulation (EU) 2026/1166 establishes implementing technical standards mapping business indicator components to corresponding cells in the financial reporting (FINREP) templates under Commission Implementing Regulation (EU) 2024/3117. Together, the measures form part of the CRR3 reforms and provide greater clarity on the calculation and reporting of operational risk requirements. Both Regulations enter into force on 23 September, being 20 days after publication in the OJ.

The European Banking Authority (EBA) has launched a consultation on draft regulatory technical standards (RTS) specifying the operational risk management framework that institutions must have in place as set out in Article 323 of the Capital Requirements Regulation (CRR), as amended by CRR3. The draft RTS specify the three main components of the framework:

• Governance arrangements.
• The operational risk management process.
• The operational risk assessment system.

The draft RTS clarify the roles and responsibilities of the management body, senior management and the independent operational risk management function. They also set requirements for operational risk data and taxonomy, the business indicator component, reporting, validation and audit. Requirements relating to ICT risk are addressed through the Digital Operational Resilience Act (DORA).

Institutions with a business indicator below EUR 750 million will benefit from a lower frequency of reviews and reporting, a lesser level of granularity for their operational risk data, loss thresholds, and operational risk taxonomy. The deadline for comments is 31 December. The EBA will also hold a public hearing on 29 September (the deadline for registration for this is 25 September).

The European Banking Authority (EBA) has launched a consultation on three separate draft regulatory technical standards (RTS) relating to the reclassification of investment firms under Directive EU2013/36/EU (CRD IV), when they exceed the EUR 30 billion total assets threshold. Investment firms whose total assets exceed EUR 30 billion are required to obtain credit institution authorisation under CRD IV rather than operating under a MiFID investment firm licence.

Following amendments in 2024 to the CRD IV, which clarified the scope of entities to be included in the calculation of the total assets, the EBA has revised its draft RTS on the methodology for calculating the thresholds and on the related reporting requirements for investment firms to be provided to competent authorities. In addition, the EBA is consulting, for the first time, on draft RTS specifying the factors competent authorities must consider when assessing whether to grant a waiver from the requirement to hold a credit institution authorisation. Where a waiver is granted, the firm may continue to operate under an investment firm authorisation. The deadline for comments is 25 November and the EBA will hold a virtual public hearing on 30 September (the deadline for registration for this is 25 September).

The Council of the European Union has published a note (dated 20 July) containing a letter from the European Commission (EC) to the European Banking Authority (EBA) regarding the final draft regulatory technical standards (RTS) developed by the EBA amending Commission Delegated Regulation (EU) No 241/2014. The final draft RTS concern the timing of applications for prior permission to reduce own funds and eligible liabilities instruments under Articles 78 and 78a of the Capital Requirements Regulation (Regulation 575/2013). The proposed amendments would have shortened 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.

However, the EC explains in the letter that it has decided that it will not endorse the draft RTS in their current form. The EC states that it would not be proportionate to revise the existing RTS at this stage only for this issue, in particular, as a number of competent and resolution authorities have already publicly stated their intention to provide, in certain circumstances and under certain conditions, such approvals within significantly shorter timeframes than the currently proposed three months. While the EC acknowledges the EBA's intent to contribute to the broader simplification agenda, it notes the EBA has already launched a broader, more far-reaching review of the prior permission regime, which the EC considers more appropriate towards genuine simplification. The EC highlights that an incremental amendment of such limited scope would in all likelihood necessitate reopening the same Level 2 act within a short period of time. The EC urges the EBA to consolidate the proposed adjustment and any further simplification measures into its ongoing comprehensive review so that the framework may be revised once, coherently, and with lasting effects. The EC confirms that the EBA may, within six weeks (by 31 August), resubmit a revised draft of the RTS in the form of a formal opinion; failing that, the draft RTS will be considered formally rejected by the EC.

Commission Implementing Regulation (EU) 2026/1872 has been published in the Official Journal of the European Union (OJ). The Regulation amends the implementing technical standards (ITS) set out in Implementing Regulation (EU) 2016/2070 governing the European Banking Authority's (EBA) supervisory benchmarking exercise of credit and market risk under Article 78(2) of Directive 2013/36/EU (CRD IV). Based on the EBA's final draft ITS published in August 2025, the Regulation makes several changes including:

• Updating benchmark portfolios, reporting templates and reporting instructions to reflect recent changes introduced by CRD VI, including ESG risk requirements and revised supervisory benchmarking requirements.
• Taking into account the delayed application of the Fundamental Review of the Trading Book market risk framework until 1 January 2027, temporarily limiting the scope of the benchmarking exercise to institutions that are permitted to use the Internal Model Approach (IMA).
• Restricting data collection for institutions that use the IMA and fall within the scope of the market risk exercise to Alternative Standardised Approach elements until 1 January 2027.
• Aligning the exposure classes used in determining the benchmarking portfolios with the approach taken in the credit risk internal ratings-based (IRB) templates set out in Implementing Regulation (EU) 2024/3117.

The Implementing Regulation enters into force on 1 September, 20 days following its publication in the OJ.

The European Banking Authority (EBA) has published a no-action letter on the application of the boundary between the trading book and banking book under the Fundamental Review of the Trading Book (FRTB) framework. It also published technical clarifications on issues arising from the European Commission's (EC) third Delegated Act modifying the calculation of own funds requirements for market risk under the FRTB.

The Delegated Act, adopted on 4 June, seeks to introduce targeted operational relief measures, and define targeted multipliers, that modify the implementation of the FRTB framework in the EU from 1 January 2027 to 31 December 2029, in light of delays of the implementation of that framework in other jurisdictions.

In its no-action letter, the EBA recommends that competent authorities do not prioritise supervisory or enforcement action relating to: (i) the provisions governing the boundary between the banking book and the trading book and internal risk transfers between these books; and (ii) related reporting requirements. This is intended to avoid firms having to operate parallel trading book boundary regimes for different purposes and allow institutions not using the multiplier in the Delegated Act to also base the calculation of their own funds requirements for market risk on the CRR2 boundary framework. The EBA advocates for a legislative proposal from the EC to provide the necessary legal certainty as concerns the application, temporary suspension of application or modification, as applicable, of Articles 104, 104a, 106(2) to (7), 204a and 325j(5) of Regulation (EU) No 575/2013 from 1 January 2027 to 31 December 2029, and to revise the start date for the reporting of information on the composition of the trading book and reclassifications between books based on the FRTB boundary framework, to align with the start date for the application of the FRTB boundary for the purposes of the calculation of the own funds requirements for market risk. The EC's Communication of 17 July confirmed its intention to proceed with a legislative proposal in the first quarter of 2027.

The EBA also sets out technical considerations on material implementation issues for the application of the market risk framework as modified by the Delegated Act which includes, amongst others, eligibility to use the overall multiplier and notifications to national competent authorities for use of the multiplier, application of the overall multiplier of Article 495v in conjunction with the output floor, and reporting and disclosure requirements.

The EBA's no-action letter and technical considerations will become relevant if and once the Delegated Act enters into force.

The European Central Bank (ECB) has published the results of its 2026 thematic reverse stress test on geopolitical risks which involved 110 directly supervised banks in the euro area. The exercise, which forms part of the ECB's supervisory priorities for 2026-28, aimed to strengthen banks' risk management and stress-testing capabilities in light of heightened geopolitical risks. Banks were required to design severe but plausible geopolitical scenarios that would result in a 300-basis point depletion of their Common Equity Tier 1 (CET1) ratio. Unlike traditional stress tests, which apply a common scenario across all firms, the exercise required each bank to develop a scenario tailored to its own risk profile.

The ECB found that most banks were able to produce meaningful reverse stress test simulations. However, it identified several areas for improvement in banks' Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process stress-testing frameworks, including:

• Granularity and scenario sensitivity: ICAAP frameworks need to have an appropriate level of granularity in the risk assessment, and should better capture vulnerable sectors, relevant risk events and emerging risks.
• Importance of multiple scenarios: the exercise confirmed the importance of banks considering a broader range of scenario outcomes when assessing resilience.
• Consistency between scenario narrative and transmission channels: some banks did not adequately link stress scenarios to their most important and geopolitically vulnerable portfolios in the exercise—the ECB emphasises the importance of clearly translating shocks into solvency and liquidity positions, as well as operational resilience.
• Dynamic balance sheet projections: some banks appeared overly optimistic in their assumptions regarding balance sheet expansions in geopolitical stress scenarios.
• Realism of mitigating actions: banks should have well-articulated and prepared but also realistic action plans to mitigate and guard against the effects of negative geopolitical shocks.
• Solvency-liquidity nexus: many frameworks did not adequately capture the relationship between solvency and liquidity stress.

The ECB states that the results will inform ongoing supervisory dialogue and qualitative assessments under the Supervisory Review and Evaluation Process and could therefore affect Pillar 2 requirements, but will not result in changes to banks' Pillar 2 guidance (P2G) or the leverage ratio P2G.

The UK Prudential Regulation Authority (PRA) has published policy statement LIAF02/26, finalising a series of amendments to its Rulebook and policy materials that it considers low impact. This follows its April consultation (LIAC01/26).

Following consultation responses on proposals 1 and 3, the PRA is:

• amending the Groups Part of the PRA Rulebook to clarify that proportional consolidation applies where a participation arises through voting rights, not only share of capital, with related updates to SS15/13 – Groups setting out how firms should determine the proportion to consolidate where voting rights and share of capital differ. Under the PRA Rulebook: CRR firms: Group Instrument 2026, the Annex A rule amendments take effect on 30 July, the Annex B amendments on 1 January 2027, and the SS15/13 from 1 January 2027, although firms may refer to them for guidance in the meantime; and
• amending the Countercyclical Capital Buffer Rates UK Technical Standard to replace cross-references to the Capital Requirements Regulation with references to the PRA Rulebook, including aligning the 'trading book exposures' definition with the Capital Buffers Part of the PRA Rulebook, effective 1 January 2027.

On proposals 2,4 and 5, the PRA has finalised these proposals as consulted on. They cover: (i) consequential amendments to certain PRA rules relating to the Capital Requirements Regulations 2013; (ii) amendment to the frequency of the other systemically important institution (O-SII) designation exercise in statement of policy (SoP)1/16; and (iii) amendments to the definition of firms in scope of the O-SII buffer in SoP1/16 and SoP4/16. For proposal 6, the PRA has made minor amendments to its proposed updates to SoP1/20, which are intended to improve clarity and do not alter the substance of the policy.

The PRA is also making minor corrections without further consultation, including: updating the "netting set" definition in the Glossary Part to correct a cross-reference error, effective 1 January 2027; correcting the General Notification and Regulatory Reporting Parts to confirm that third-country branches are excluded from material third-party notification requirements and that UK branches of overseas banks are included in operational incident reporting requirements, effective 18 March 2027; and correcting the Credit Risk: Standardised Approach and Internal Ratings Based (CRR) Parts and SS10/13, including clarifications to Articles 120(4), 121(2), 121(5) and 151(5) and to the "residential real estate" references in SS10/13, effective 1 January 2027.

The UK Prudential Regulation Authority (PRA) has published consultation paper LIAC02/26, proposing a series of low-impact amendments to its Rulebook and policy materials. The proposals include:

• Amendments to Supervisory Statement SS25/15 and the associated IM.03 reporting instructions to remove Lloyd's syndicates from the scope of internal model output reporting. These changes are proposed to take effect on 31 December. The PRA also makes other consequential changes.
• Amendments to the Liquidity (CRR) Part and the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook, comprising: clarification that firms are responsible for assessing third-country equivalence for non-UK covered bonds to be eligible as level 2A liquid assets; consequential changes following the expected implementation of HM Treasury's Overseas Prudential Requirements Regime (including a related update to SS24/15); and consequential changes following implementation of Basel 3.1 standards and the restatement of CRR requirements, including updated cross-references and treatment of retail and real estate exposures. These changes are proposed to take effect on 1 January 2027.

The deadline for comments is 11 September.

The Commission Implementing Regulation (EU) 2026/1757 was published in the Official Journal of the European Union (OJ). This sets out implementing technical standards (ITS) specifying the supervisory reporting requirements applicable to third-country branches (TCBs) established in the EU under the revised Capital Requirements Directive (CRD VI) framework. The ITS introduce a common reporting framework for competent authorities and distinguish between Class 1 and Class 2 TCBs, with the former subject to more extensive and frequent reporting requirements. The Regulation prescribes reporting templates, reference dates and remittance deadlines covering, among other things, branches' financial and regulatory information, liquidity coverage, capital endowment requirements, intra-group exposures and concentrations, as well as information relating to the branch's head undertaking. The European Banking Authority is required to develop and maintain the associated IT reporting solutions and instructions. The Regulation enters into force on 16 August, being the 20th day following publication in the OJ. It will apply from 28 March 2027, aligning with the commencement of the underlying CRD VI TCB regime.

The Commission Delegated Regulation (EU) 2026/849 supplementing the Capital Requirements Regulation (EU) No 575/2013 (CRR), as amended by the CRR3, was published in the Official Journal of the European Union (OJ). The Delegated Regulation sets out regulatory technical standards (RTS) specifying what constitutes an equivalent legal mechanism that ensures that a residential property under construction is completed within a reasonable timeframe. It is based on final draft RTS published by the European Banking Authority in August 2025 and was subsequently adopted by the European Commission in April this year. The RTS is covered in more detail in our blog post titled "EC adopts Delegated Regulation on equivalent mechanism for unfinished property under CRR3". The Delegated Regulation enters into force on 12 August, 20 days after its publication in the OJ.

The European Banking Authority (EBA) has launched a consultation on draft implementing technical standards (ITS) amending Commission Implementing Regulation (EU) 2016/2070 with regard to the benchmarking of internal models and the standardised approach for market risk for the 2027 exercise. Article 78 of the Capital Requirements Directive 2013/36/EU requires competent authorities to conduct annual assessments of the quality of internal approaches used to calculate own funds requirements. To support competent authorities in this assessment, the EBA calculates and distributes benchmark values based on data submitted by institutions as set out in Commission Implementing Regulation (EU) 2016/2070, which specifies the benchmarking portfolios, templates and definitions to be used as part of the annual benchmarking exercises.

For the 2027 exercise, the EBA proposes to make the following changes:

• Updating the framework for the expanding scope of the market risk benchmarking exercise to institutions applying the CRR3 Alternative Standardised Approach, regardless of whether they use an internal model.
• Resuming the collection of data under the CRR2 Internal Model Approach.
• Postponing the 2027 benchmarking exercise to the second half of 2027.
• Postponing the collection of data under the CRR3 Alternative Internal Model Approach, given the uncertainty surrounding its effective implementation.
• Reorganising and rationalising the market risk reporting templates.

Booking instructions are included in an annex to the consultation paper. The deadline for comments is 3 September, with a public hearing scheduled for 28 July. The EBA will submit the draft ITS to the European Commission for endorsement before publication in the Official Journal of the European Union (OJ). The technical standards will apply 20 days after their publication in the OJ.

The European Banking Authority (EBA) has published its final report with final draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the revised Capital Requirements Directive (CRD VI) concerning prudentially material transactions. CRD VI introduces new supervisory tools covering material acquisitions, material transfers of assets or liabilities, mergers and divisions involving credit institutions or (mixed) financial holding companies and mandates the EBA to develop RTS to further specify aspects of these material operations, as well as ITS establishing common procedures, forms and templates for cooperation between competent authorities.

The RTS specify, in respect of each of the material operations, the minimum information to be provided, the common assessment methodology, and the process for the notification and prudential assessment. The ITS concern the common procedures, forms and templates for the consultation process between the relevant competent authorities concerning material operations. Following the December 2025 consultation, the EBA has introduced a number of changes to the draft RTS and ITS as summarised in section 4.3 of the final report.

The EBA has applied the principle of proportionality throughout the draft technical standards. The RTS avoid duplication by exempting institutions from submitting information already held by the competent authorities, and by leveraging documentation prepared under the Company Law Directive. Information requirements and assessment are further simplified for intra-group material transactions.

To enhance efficiency, competent authorities will be required to inform applicants without undue delay whether they will exercise discretion not to assess certain intra-group material acquisitions or mergers, where permitted under the CRD. In addition, a simplified regime is introduced for mergers and divisions involving smaller entities. The draft technical standards also address cases where a single transaction triggers multiple notification requirements under the CRD, introducing harmonised terminology, and common information requirements to streamline processes, improve clarity and supplement Level 1 provisions.

The draft technical standards will now be submitted to the European Commission for endorsement before undergoing scrutiny by the European Parliament and Council of the EU. They will then be published in the Official Journal of the European Union.

The European Commission (EC) has adopted a communication on the competitiveness of the EU banking sector, setting out measures to strengthen the Single Market for banking as part of its Savings and Investments Union strategy. Following a consultation in February and member state engagement, the EC has identified three key challenges that limit the banking sector's ability to support the EU economy effectively: (i) the sector remains too fragmented along national lines, preventing EU banks from scaling up and competing globally; (ii) the way Basel III standards are transposed into the EU framework does not always reflect the specific features of the EU banking landscape — the framework needs to work better for both large and small banks; and (iii) some parts of the EU regulatory framework, including the interaction between microprudential, macroprudential and resolution rules, as well as reporting requirements, are too complex and burdensome and should be simplified.

To address these challenges, the communication identifies measures that are built around three objectives:

• Removing barriers to cross-border banking activity and fostering market integration—allowing cross-border banking groups to use capital and liquidity more efficiently across the EU; strengthening common safeguards through proposing a simpler and more effective common deposit protection mechanism in the Banking Union, replacing the 2015 European Deposit Insurance Scheme proposal; and closer monitoring of EU anti-money laundering and consumer protection frameworks and their national implementation.
• Implementing international standards while considering EU specificities and proportionality—re-assessing how the EU implements certain international standards that may be limiting the lending capacity of EU banks; and possible revisions of certain prudential and corporate governance rules to better reflect EU banks' specificities in relation to banks' size, business models and activities.
• Simplifying the regulatory framework for banks—simplifying the capital stack and further harmonising banks' macroprudential buffers; standardising and streamlining resolution capital requirements and processes; and adjusting the criteria and thresholds for "small and non-complex institutions" and adapting their requirements.

The EC invites stakeholder feedback in the coming months and intends to publish a package of measures to amend the banking regulatory framework and deliver on this communication in Q1 2027. The EC has also published accompanying documents, including summaries of responses to its consultation and call for evidence, which can be found on its new webpage.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/28, amongst a package of consultations on modernising the UK asset management regulatory framework. The consultation should be read alongside HM Treasury's (HMT) proposed reforms to the legislative framework for alternative investment fund managers (AIFMs), set out in a policy note and the draft statutory instrument (SI) published for technical comment.

Most firm-facing requirements inherited from the EU framework will move from legislation and be transferred to the FCA's rulebook. The FCA's consultation sets out the rules and changes it proposes to introduce in the following areas:

• A new three-tier regime for AIFMs, with requirements calibrated by firm size using net asset value thresholds of GBP750 million and GBP5 billion, replacing the current legislative thresholds.
• Simplification of the regime by removing or reducing detailed, prescriptive requirements inherited from the Alternative Investment Fund Managers Directive, producing a more proportionate framework.
• A clarified scope of regulation and authorisation.
• A new FCA sourcebook titled the "Alternative Investment Funds sourcebook" for managers of unauthorised funds.
• Changes to valuation, leverage, risk management, liquidity management, delegation, investor disclosure and cross-border marketing requirements.

The consultation also includes discussion chapters on depositaries, prime brokers, the business restriction and the prudential regime for AIFMs. Feedback on the discussion chapters is due by 18 September, while feedback on all other consultation proposals, together with the discussion chapter on the prudential regime, is due by 14 October. The FCA intends to publish a policy statement in 2027 and will implement its rules in 2028.

The UK Prudential Regulation Authority (PRA) has published policy statement PS16/26, setting out its final rules to accommodate HM Treasury's (HMT) overseas prudential requirements regime (OPRR), which will revoke and restate certain Capital Requirements Regulation (CRR) equivalence provisions in UK legislation. HMT consulted on the creation of the regime in July 2025 and published its response in February, in parallel to the PRA's consultation on that same date. The changes are intended largely to maintain the existing prudential framework while ensuring that PRA rules operate effectively under the new legislative regime.

Following consultation feedback from a single joint response, the PRA has made a number of clarificatory and technical amendments, including changes to certain defined terms, as well as minor updates to Pillar 2 instructions, supervisory statements (SoP5/25, SS31/15 and SS4/26) and reporting instructions to reflect the introduction of the OPRR and revocation of the CRR provisions. The amended materials are included in the appendices of the policy statement. Final rules will apply from 1 January 2027 (alongside the implementation of Basel 3.1). This will coincide with HMT's commencement regulations that revoke the relevant provisions of the UK CRR, which are expected to be replaced by the draft Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026.

HM Treasury (HMT) has published a consultation on proposed ring-fencing reform following its review published in May. The review found that while the regime remains an important component of UK financial stability, it should be updated to be more flexible, proportionate and responsive to developments. The government confirmed its intention to take forward a package of proposals through primary legislation (as part of the ongoing Financial Services and Markets Bill), secondary legislation and the UK Prudential Regulation Authority (PRA) rulebook.

The government is now consulting on the technical details of implementing the aspects of the package to be delivered via secondary legislation. This covers:

• A new growth allowance, proposed at 10% of a ring-fenced banks (RFBs) Pillar 1 risk-weighted assets for credit risk (including counterparty credit risk). The allowance will incorporate existing small and medium-sized enterprise (SME) exemptions and the relevant financial institution de minimis.
• Expanding the range of products RFBs are permitted to offer, so the ring-fencing legislation on permitted derivatives will be brought into line with Basel 3.1 and permit RFBs to offer customers a wider suite of derivative products which are not in scope of the market risk relevant risk add-on as defined in the PRA Rulebook.
• Expanding the range of counterparties RFBs are permitted to have exposures to, including holding exposures to Undertakings for Collective Investment in Transferable Securities and to Structured Finance Vehicles set up for the purpose of securitising SME loans, amongst others.
• Management of pension schemes.

HMT is also seeking to understand if any further technical changes could be made to address barriers to RFBs supporting the UK real economy.

The deadline for responses is 8 September. The government will consider feedback before publishing a draft statutory instrument; the final instrument will be laid in 2027, following Parliament's approval of the Financial Services and Markets Bill and subject to parliamentary time.

In parallel, the PRA published a consultation paper confirming its intention to consult on deleting rules 9.1, 9.2 and 9.3 of the Ring-fenced Bodies Part of the PRA Rulebook.

The European Banking Authority (EBA) has published a final report with draft implementing technical standards (ITS) on the implementation of international financial reporting standard (IFRS) 18 in supervisory financial reporting (FINREP) under the Capital Requirements Regulation (CRR). IFRS 18, which replaces International Accounting Standard (IAS) 1 and applies from 1 January 2027, introduces a new structure for statements of profit or loss. The final report sets out the amendments required to align FINREP with IFRS 18, including amended versions of the relevant reporting templates which can be found in the press release.

The EBA also published an opinion providing guidance on how institutions can report profit or loss information during the interim period between the first application date of IFRS 18 and the first application date of the amending ITS on the supervisory FINREP (which is currently under consultation until 10 July). While institutions must apply IFRS 18 in their public financial statements from 1 January 2027, the amended FINREP ITS incorporating IFRS 18 are expected to apply from the end of September 2027. To bridge this gap, the EBA advises competent authorities to allow institutions to use a set of IFRS 18-aligned FINREP templates on a voluntary basis during the interim period, thereby avoiding the operational burden of maintaining two different profit or loss reporting frameworks.

The data point model and the XBRL taxonomy based on the revised templates for the implementation of IFRS 18 will be published by the end of July, or at the latest at the beginning of September. The final report will be merged with the final report on the supervisory FINREP, which the EBA expects to submit to the European Commission by the end of the year.

The European Banking Authority (EBA) has published its final report on the guidelines on the authorisation of third-country branches (TCBs) under Article 48c(8) of the Capital Requirements Directive (CRD), as amended by CRD VI (Directive (EU) 2024/1619). Following the November 2025 consultation, no changes have been made by the EBA.

The guidelines set out: (i) the list of information to be included in the application, concerning matters such as the business plan, capital endowment, liquidity, internal governance, booking arrangement and reporting requirements and information about head undertaking(s), in particular their compliance with prudential requirements and a reasoned, third party legal opinion stating that there is no obstacle for the applicant head undertaking to comply with EU and national law, in as much as applicable, in relation to the TCB.; (ii) the procedure for authorisation, as well as standard forms and templates for the provision of the information required; (iii) the conditions for granting authorisation; and (iv) the conditions under which competent authorities may rely on information that has already been provided in the process of any prior third-country branch authorisation. The guidelines will be translated into the official EU languages and published on the EBA website. Competent authorities will have two months from the publication of the translations to report on whether they comply, intend to comply or reasons for non-compliance. The guidelines will apply from 11 January 2027.

The UK Prudential Regulation Authority (PRA) has published a statement clarifying that it may release other systemically important institution (O‑SII) buffers during periods of systemic stress. Consistent with the Bank of England's Financial Policy Committee's vision to modernise the bank capital framework, and as a near-step in support of that vision, the PRA intends to do so by exercising its existing powers to vary O‑SII buffer rates. This includes reducing them to zero under the Capital Buffers and Macro-prudential Measures Regulations 2025 while engaging with the FPC. The PRA explains that releasing O‑SII buffers would lower the capital threshold at which automatic distribution restrictions apply in stress, which in its view will support banks' ability to absorb losses rather than taking defensive actions such as reducing lending.

The PRA states that, following any release of the O-SII buffer, it would provide an indicative period during which no increase in O‑SII buffer rates would be expected, and that any subsequent rebuild would be phased over a period consistent with banks' ability to restore capital while continuing to lend to creditworthy UK households and businesses.

The PRA intends to consult later this year on proposed changes to its statement of policy on the approach to implementation of the O-SII buffer and related aspects of its approach to varying O-SII buffer rates in the event of systemic stress. This will include further guidance on rebuild expectations. The PRA will also consider whether greater clarity on the use of the PRA buffer outside periods of systemic stress, together with further engagement with investors and rating agencies, could improve the usability and understanding of regulatory capital buffers.

Commission Delegated Regulation (EU) 2026/807 amending the regulatory technical standards (RTS) set out in Delegated Regulation (EU) 2023/206 was published in the Official Journal of the European Union (OJ). 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). It was initially adopted on 10 March, and we cover the amendments it made on our blog here. The Amending Regulation is based on final draft RTS developed by the European Banking Authority and published in December 2025. It will enter into force on 28 June, being the 20th day following publication in the OJ.

The Bank of England's Financial Policy Committee (FPC) has published a financial stability in focus report proposing reforms to modernise the UK bank capital framework to make it simpler, more effective, proportionate and better calibrated to current risks while maintaining financial resilience. The package aims to address unintended consequences in the leverage framework and strengthen the releasability and usability of buffers.

The FPC reaffirms its assessment from its December 2025 report that an appropriate benchmark for system wide Tier 1 capital requirements remains around 13% of risk weighted assets (equivalent to a Common Equity Tier 1 ratio of around 11%). Since December, the FPC, working with the UK Prudential Regulation Authority (PRA), has progressed its analysis of buffer usability and the leverage ratio, and is announcing a package of reforms informed by the feedback it has received. In this report, the FPC sets out its longer term vision for a simpler capital buffer framework centred on a single buffer that is releasable in stress and can be used without automatic distribution restrictions. As an initial step, the FPC welcomes the PRA statement with its decision to make the other systemically important institution buffers releasable in the event of systemic stress. We cover the PRA's statement in a separate update.

In addition, the FPC and PRA intend to consult on reforms to the leverage ratio framework, including: (i) removing the countercyclical leverage buffer; (ii) increasing the additional leverage ratio buffer for firms with systemic buffers to 50% of corresponding risk weighted systemic buffers in line with international standards; and (iii) reducing the minimum leverage ratio requirement from 3.25% to 3%, and applying a simple general leverage ratio buffer set at 25 basis points for firms subject to leverage requirements. The FPC and PRA will further assess the impact of these proposals on financial stability and market functioning at the Q3 FPC meeting. Separately, the FPC expects to update its assessment of the interaction of capital requirements related to domestic exposures in its Q4 2026 financial stability report.

The Bank of England's (BoE) Financial Policy Committee (FPC) has published its July financial stability report alongside the record of its 26 June meeting. The FPC meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.

Key topics covered include:

• Markets: Vulnerabilities in risky asset valuations, sovereign debt markets and risky credit markets, including private credit, remain and some have become more pronounced since the December 2025 financial stability report. Notably, there has been a substantial increase in the use of leverage in equity markets.
• AI-related risks: The FPC examined the macro financial risks arising from the AI transition across a range of sectors. It also notes that recent rapid advances in frontier AI capabilities have increased financial stability risks related to cyber and operational resilience.
• Countercyclical capital buffer (CCyB): The FPC maintained the UK CCyB rate at its neutral setting of 2%.
• Private markets: The FPC welcomed the BoE's publication of the stress scenario for the private markets system wide explanatory scenario (SWES). The FPC expects to use the SWES to improve its understanding of how banks and non-banks active in private markets would respond to a severe but plausible global downturn.
• Bank capital reform: Following its review of bank capital requirements, the FPC announced that it will work with the UK Prudential Regulation Authority (PRA) to modernise the capital framework. The proposed reforms aim to improve the usability of capital buffers and make leverage ratio requirements more proportionate and effective while maintaining overall financial system resilience. 
• Stablecoins and money market funds (MMFs): The FPC welcomed the BoE's policy statement and consultation on the draft code of practice for systemic sterling-denominated stablecoins and recent statements by HM Treasury and the UK Financial Conduct Authority on their plans to strengthen the resilience of MMFs.

The draft Building Societies Act 1986 (Assimilation to Company Law and Changes to Funding Limit) Order 2026 has been published and laid before Parliament, alongside an explanatory memorandum. The draft Order amends the Building Societies Act 1986 (BSA 1986) to align the provisions on common seals and the execution of documents by building societies with the equivalent regime under the Companies Act 2006. Building societies will therefore be able to choose whether to execute documents using a common seal or through authorised signatories, bringing them into line with the more flexible arrangements available to companies.

In addition, under section 7 of the BSA 1986, subject to specific exemptions, at least 50% of a building society's liabilities must be shares owned by individuals (known as "the funding limit"). The draft Order makes provisions to exclude certain sources of funding for the purposes of calculating the funding limit. This includes: liquidity facilities which form part of the BoE's sterling monetary framework; debt instruments issued by building societies to meet BoE's Minimum Requirements for Own Funds and Eligible Liabilities (MREL); and sale and repurchase agreements entered into by building societies using High Quality Liquid Assets held to meet the UK Prudential Regulation Authority's Liquidity Coverage Requirement.

These changes are intended to ensure building societies are not discouraged from practices which support prudent management of liquidity, and that instruments issued to meet MREL requirements are treated appropriately with other excluded regulatory capital instruments. The Order is expected to come into force on 1 January 2027.

The European Banking Authority (EBA) has published a report with the results of a targeted peer review assessing how competent authorities supervise compliance with the Capital Requirements Regulation and Bank Recovery and Resolution Directive Pillar 3 disclosure requirements between June 2023 and June 2025. The EBA found that most authorities had fully or largely integrated Pillar 3 requirements into their supervisory frameworks, with supervisory practices generally operating efficiently and demonstrating a high degree of convergence across the EU. However, the review identified some inconsistencies between jurisdictions, including one authority rated as only partially compliant and another receiving largely "not applied" ratings due to the absence of formal assessment methodologies and processes. The EBA sets out specific individual follow-up measures where deficiencies had been identified, as well as best practices for improvement.

The draft Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 were published, accompanied by a draft explanatory memorandum. The Regulations support the transition to the FSMA 2000 model of regulation, under which detailed prudential requirements are set by the UK Prudential Regulation Authority within a framework established by government and Parliament. This transition entails the revocation of provisions of the UK Capital Requirements Regulation (UK CRR) and restatements, as needed, in UK legislation to facilitate the FSMA model, with UK CRR provisions replaced with regulator rules, supervisory statements and statements of policy.

The Regulations restate existing UK CRR equivalence provisions in legislation to create a single overseas prudential requirements regime (OPRR), preserving the scope and effect of the current prudential equivalence framework and treating existing equivalence decisions as designations under the new regime. The OPRR enables HM Treasury to designate overseas jurisdictions for specified prudential purposes, with future designations requiring a further statutory instrument and parliamentary approval. In particular, the Regulations provide a framework for designation in the context of: (i) exposures to overseas credit institutions, investment firms and exchanges; (ii) overseas eligible covered bonds; (iii) exposures to overseas central banks, regional governments, local authorities and public sector entities (with specific provision made for those in Gibraltar); and (iv) issuance of capital by overseas intermediate financial holding companies.

The Regulations are expected to enter into force on 1 January 2027.

The European Banking Authority (EBA) has published its 2025 report on supervisory convergence highlighting ongoing progress in aligning supervisory practices across the EU. The report forms part of the EBA's mandate under its Founding Regulation to enhance supervisory convergence across the internal market, and covers prudential supervision, resolution, consumer protection, digital finance and anti-money laundering and countering the financing of terrorism (AML/CTF) supervision. While progress was made in 2025, the EBA identified a number of gaps and challenges, particularly through its European Supervisory Examination Programme.

In prudential supervision, although institutions progressed in transitioning to Basel III under the Capital Requirements Regulation (CRR3), challenges remain in data quality and interpretation of new requirements. Separately, divergences were identified in P2R, particularly for concentration and interest rate risks, while P2G methodologies showed improving alignment yet remained uneven across jurisdictions.

In digital operational resilience, gaps persist in third party risk governance and automation of controls.

In resolution, challenges continue in the operational ability to deliver valuation data within short timelines, documentation completeness, governance and data-quality assurance, as well as the operationalisation and mobilisation of liquidity and collateral.

The report also highlights ongoing weaknesses in AML/CTF supervision and coordination, risks arising under MiCAR and gaps in the integration of ESG risks into supervisory frameworks.

Looking ahead, the EBA will focus on implementing Basel III reforms, advancing resolution testing frameworks, and strengthening supervision under DORA and MiCAR.

The European Banking Authority (EBA) has published its final revised guidelines for the supervisory review and evaluation process (SREP) and supervisory stress testing, mandated under the Capital Requirements Directive (CRD). The SREP is the core supervisory process that consolidates findings from all supervisory activities into a comprehensive assessment of an institution. Following consultation, the guidelines consolidate all relevant SREP provisions into a single, comprehensive framework as part of the EBA's efforts to simplify and enhance the EU supervisory framework. The update integrates new elements, including environmental, social and governance factors, operational resilience, third-country branches and clarifications on the interaction between the revised Pillar 1 and Pillar 2 capital requirements, including the output floor.

The guidelines also align with the interest rate risks for the banking book and credit spread risk arising from non-trading book activities package and incorporate ICT risk assessment into the main SREP framework. Other updates include improved proportionality, sequencing, and supervisory effectiveness, with a clearer link between supervisory measures and assessment areas. The revised guidelines will replace the existing SREP Guidelines and the Guidelines on ICT risk assessment under the SREP, with application from 1 January 2027. They will be translated into all the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations.

The Financial Services and Markets Act 2023 (Commencement No. 15 and Saving and Transitional Provisions) Regulations 2026 were made and published. The Regulations form part of the phased implementation of the Financial Services and Markets Act 2023 (FSMA 2023) with respect to the revocation of assimilated law (the body of EU law retained at the point of Brexit).

In particular, from 1 January 2027, the Regulations revoke Articles 81(1)(a)(iii), 82(a)(iii), 107(3) and (4), 114(7), 115(4), 116(5), 382(4)(b), 391 and 497 of the Capital Requirements Regulation (Regulation 575/2013) (CRR), that relate to existing equivalence regimes which are being replaced by the new UK overseas prudential requirements regime. Related legislation, specifically Regulation 11(5)(e) of the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019 and Implementing Decision 2014/908, which contains equivalence decisions relating to Articles 107(4), 114(7), 115(4), 116(5) and 142(2) of the UK CRR are also being revoked. The Regulations also amend earlier commencement regulations to remove the CRR Equivalence Directions 2020 from an existing saving provision and introduce saving and transitional provisions to preserve the treatment of central counterparties (CCPs) as qualifying CCPs (QCCPs) under Article 497 the CRR. This is to ensure continuity of treatment for recognised CCPs and those seeking recognition under the European Market Infrastructure Regulation, during the transition to the new regime.

The Bank of England (BoE) has published a final policy statement setting out its regulatory framework for sterling-denominated systemic stablecoins, alongside a consultation on the draft code of practice for issuers. This follows the November 2025 consultation.

Under the regime, which will be established through amendments made by the Financial Services and Markets Act 2023 to the Banking Act 2009, the UK Financial Conduct Authority (FCA) will regulate the issuance, custody and admission to trading of UK-issued qualifying stablecoins and, in due course, their use in payments, while systemic stablecoins recognised by HM Treasury will be regulated jointly by the BoE and the FCA.

Following consultation feedback, the BoE has made several changes to the final policy. Key changes include:

• Revising the backing asset composition from a 60/40 to a 70/30 split between short‑term UK government debt and unremunerated central bank deposits (overnight repo and reverse repo transactions using eligible government securities with a residual maturity of six months will be permitted).
• Replacing proposed holding limits with a temporary GBP40 billion issuance "guardrail", which the BoE considers significantly less complex to implement.

Read more.

The European Banking Authority (EBA) has published its final report with draft implementing technical standards (ITS) amending the Pillar 3 disclosure framework to finalise the implementation of the disclosure requirements introduced under the revised Capital Requirements Regulation (CRR3). This follows the May 2025 consultation. The ITS revise disclosures on environmental, social and governance (ESG)-related risks and introduce new requirements on equity exposures and aggregate exposures to shadow banking entities. The intention is to improve clarity, consistency and usability within the EU's broader simplification agenda. The final draft ITS are closely linked to the ESG supervisory reporting framework set out in the related consultation paper and are advised to be read together.

In relation to ESG disclosures, and in line with the CRR3 mandate, the ITS extend the scope of application beyond large listed institutions to include large non-listed institutions, other institutions, small and non-complex institutions (SNCIs) and large subsidiaries. The framework introduces a more proportionate and streamlined approach, with differentiated disclosure requirements based on institutions size and complexity. In particular, SNCIs are required to disclose only essential information (including on physical and transition risks and exposures to fossil fuel sectors), while the requirements for larger institutions are clarified and streamlined rather than expanded.

The ITS also take into account existing supervisory guidance and seek to enhance consistency across frameworks, including through alignment of terminology and instructions which can be found in the press-release.

The draft ITS will be submitted to the European Commission for adoption. They are expected to apply from a reference date of 31 December 2026, with a later application date of 31 December 2027 for SNCIs. The instructions to the templates will not be published in the Official Journal, but will be published on the EBA website, and disclosures should be provided in accordance with those instructions. They will be available in all languages and shall remain directly applicable in all Member States as part of the ITS.

The Bank of England (BoE) has announced the scenario phase of its second system wide exploratory scenario (SWES), this time focused on private markets. The BoE has issued participants with a hypothetical stress scenario that details a severe, but plausible, global macro-economic recession over a five-year period. The severity of this shock has been calibrated to represent a tail-risk outcome for the global economy and is broadly consistent with the severity of other stress tests run, such as the bank capital stress test. The exercise aims to assess whether vulnerabilities in private markets could have systemic implications and under what conditions. Conducted in two rounds, participants will model the impact of the scenario and their behavioural responses.

The exercise will examine vulnerabilities including leverage, valuation opacity, liquidity pressures, interconnectedness and deteriorating credit quality, as well as systemic transmission channels through which stress could spread to markets, institutions and the real economy. Following round 1, the BoE will provide aggregated feedback, allowing firms to update their responses. Initial findings will be published in the July Financial Stability Report, with interim results expected later in the year and a final report expected in 2027. A new webpage detailing the hypothetical scenarios to be used in the SWES was published on the same day.

The UK Prudential Regulation Authority (PRA) has published consultation paper CP9/26, setting out proposed adjustments to the Basel 3.1 internal model approach (IMA) for market risk. The Basel 3.1 standards introduce a comprehensive set of amendments to the market risk framework, commonly referred to as the fundamental review of the trading book (FRTB), with implementation deferred to 1 January 2028. As part of its ongoing monitoring of FRTB implementation, the PRA has identified several areas where targeted adjustments could improve the proportionality and operational effectiveness of the framework, while maintaining robust prudential standards.

Key proposals include:

• Extending the profit and loss attribution test monitoring period from one year to three years.
• Adjusting elements of the risk factor eligibility test (RFET).
• Introducing targeted adjustments and operational simplifications to the non modellable risk factors framework, a new feature of the Basel standards linked to the RFET.
• Reducing barriers to gradual IMA approval by adjusting calculations for firms who use a mix of the IMA and standardised approaches, preventing a scenario where capital requirements could rise as firms move gradually on to IMA.
• Implementing operational simplifications to the treatment of collective investment undertakings.
• Making other minor adjustments and clarifications to the IMA framework.
• Updating reporting and disclosure requirements to align with the proposals above.

The deadline for responses is 18 September. The PRA proposes that the implementation date for the IMA, including the changes resulting from this consultation, will remain 1 January 2028. No other changes are being proposed and all other rules come into force in January 2027, as previously planned.

The European Banking Authority (EBA) has published a report proposing targeted simplifications to the EU bank capital framework, following a holistic review of the microprudential, macroprudential and resolution capital regime in the EU ("stacking order"). The report forms part of the EBA's broader priority of simplifying and enhancing the efficiency of the regulatory and supervisory framework under its 2026 work programme and follows its earlier report in October 2025 on the efficiency of the regulatory and supervisory framework.

The EBA does not advocate a fundamental redesign but instead recommends potential adjustments to reduce complexity and improve consistency, predictability and effectiveness while preserving the acquired resilience of the European banking system. Recommendations in the report follow four guiding principles: preserving overall resilience and capital neutrality; adhering to international standards; ensuring proportionality; and enhancing the efficiency and depth of the Single Market.

Key recommendations include:

• Microprudential stack. Preserving most elements of the current microprudential toolkit, including Pillar 1, Pillar 2 requirements and Pillar 2 guidance while clarifying and strengthening their respective roles. The report also recommends streamlining the leverage ratio stack by converting its Pillar 2 requirement into a buffer and removing its Pillar 2 guidance. In addition, the EBA suggests removing macroprudential considerations from the microprudential stack.

Read more.

The European Banking Authority (EBA) has launched a consultation on the methodology, templates and template guidance for the 2027 EU wide stress test, assessing the resilience of EU banks and the wider banking system. The exercise introduces significant simplifications to improve efficiency and risk sensitivity, while preserving the robustness and comparability of results. Key changes include a substantial reduction in data requirements and closer alignment of information with harmonised supervisory reporting. For the first time, the exercise will also integrate both transition and physical climate risk assessments. The consultation has been launched earlier than in previous cycles to support banks’ preparedness and the EBA also plans to hold a series of workshops for further guidance. The results of the stress test will continue to inform the Supervisory Review and Evaluation Process.

The European Banking Authority (EBA) has published a discussion paper on extending its Pillar 3 data hub to small and non-complex institutions (SNCIs). The hub provides public access to prudential information from all European Economic Area credit institutions in a single location. It was launched in January for large and other institutions and the EBA is now progressing its extension to SNCIs. For these institutions, the EBA is mandated to prepare and publish the Pillar 3 disclosures based on supervisory reporting data submitted to competent authorities. The discussion paper proposes a simplified process detailing the methodology for calculating Pillar 3 disclosures. It also outlines the next steps and the expected timeline for the first publication. The deadline for feedback is 20 July and a public hearing is scheduled for 1 July. Responses will inform the finalisation of the SNCI process and the calculation methodology.

The European Commission (EC) has adopted a Delegated Regulation proposing targeted amendments to the EU prudential framework for banks' market risk, specifically the Fundamental Review of the Trading Book (FRTB) under the Capital Requirements Regulation (CRR). While most Basel III reforms have applied since 1 January 2025, the FRTB has been deferred on several occasions, most recently to 1 January 2027 in response to uncertainty around implementation timelines and potential deviations from the Basel standards in other major jurisdictions. The Delegated Regulation sets out amendments to support a level playing field for EU banks competing internationally in trading activities by offsetting the negative capital impact of the FRTB for a period of three years. It reflects feedback from the November 2025 consultation and the most recent April consultation, as well as input from member state experts. The Delegated Regulation will now be reviewed by the European Parliament and the Council of the EU, with a three-month scrutiny period (extendable by a further three months). If no objection is raised, the measures will enter into application on 1 January 2027, for a period of three years. The EC has published Q&As alongside the adopted Delegated Regulation.

The UK Prudential Regulation Authority (PRA) has published a policy statement (PS15/26) on phase 1 of its Pillar 2A review. The policy statement provides feedback on the PRA's previous May 2025 consultation paper (CP12/25). In addition, having considered the responses to CP12/25, the PRA has made changes to the draft policy materials to provide greater detail and increase clarity where relevant, including:

• Excluding exposure to SMEs from the systematic methodology for unconditionally cancellable commitments in the retail exposure class.
• Removing exposures secured by collateral recognised through the Financial Collateral Simple Method (FCSM) from the scope of the systematic methodology.
• Providing greater flexibility in how firms are expected to assess their idiosyncratic credit risks, compared to the consultation proposal to introduce expectations for firms to use credit scenarios.
• Clarificatory updates to improve transparency and guidance for all firms, and changes to the small domestic deposit takers (SDDT) policy materials to align the operational risk Pillar 2A methodology for SDDTs and non-SDDTs.

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The European Commission (EC) has adopted a Delegated Regulation regarding regulatory technical standards (RTS) specifying operational risk requirements under the Capital Requirements Regulation (CRR), as amended by the CRR3. The Delegated Regulation is based on draft RTS submitted by the European Banking Authority (EBA) and specifies key aspects of the operational risk framework. The RTS, amongst others:

• Business indicator components—specify the components of the business indicator by setting out a list of items and the elements to be excluded from the business indicator.
• Mergers, acquisitions and disposals—set out how institutions are to determine adjustments to the business indicator and their loss data set following mergers, acquisitions and disposals. In the case of disposals, they specify the conditions under which competent authorities may grant permission to exclude amounts related to disposed entities or activities from the business indicator, and the timing of such adjustments.

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The UK prudential regulation authority (PRA) has published a policy statement providing feedback on the PRA's July 2025 consultation paper CP19/25 on the restatement of UK Capital Requirements Regulation (CRR) definitions in the PRA Rulebook, along with its final policy. Following respondent feedback, the PRA is making the following changes to the draft policy it consulted on:

• Consistent italicisation of embedded CRR terms in the PRA Rulebook Glossary definitions and cross-references to legislative definitions throughout.
• Change to the "branch" definition in the PRA Rulebook Glossary to better align its wording with the CRR definition.
• Additional wording in Article 229(3) of the Credit Risk Mitigation (CRR) Part to specify the meaning of "market value" in that context.
• Change to the "recognised exchange" definition to reflect the policy position confirmed in PS6/26—Recognised exchanges policy and transfer of main indices.

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The UK Prudential Regulation Authority (PRA) has issued a Dear CEO letter setting out updated expectations on the prudential treatment of tokenised assets, stablecoins and other cryptoasset exposures. This replaces the 2022 guidance which set out interim expectations when cryptoasset markets were less developed and international standards were still under development.

The PRA reaffirms that firms should apply the full prudential framework to cryptoasset exposures, including the Fundamental Rules, Pillar 1 and Pillar 2 requirements, and the Internal Capital Adequacy Assessment Process. It emphasises the need to maintain strong governance and risk management, including by carefully assessing whether the characteristics of these assets are sufficiently captured within existing frameworks.

It confirms that a conservative capital treatment remains appropriate for most cryptoassets, including a 100% capital requirement for unbacked cryptoassets, while recognising that certain newer forms of cryptoassets may warrant a more risk-sensitive approach. The PRA also clarifies that tokenised traditional assets should generally receive the same prudential treatment as their non-tokenised equivalents where legal rights and underlying risks are comparable, in line with a "same risk, same regulatory outcome" principle.

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The European Banking Authority (EBA) has published a final report amending its guidelines on the application of the definition of default under Article 178 of the Capital Requirements Regulation (CRR), as amended by CRR3. This follows the EBA's July 2025 consultation. The report introduces targeted amendments to better reflect specific aspects of non recourse factoring, increasing the exceptional days past due threshold at invoice level from 30 to 90 days for factoring arrangements to better reflect the economic features of purchased receivables. The amended guidelines also confirm that the existing 1% threshold for the net present value loss in debt restructuring remains appropriate for prudential default recognition. In addition, the guidelines have been updated to align with the amendments introduced by the CRR3. The EBA has decided not to introduce changes to shorten the probation period or to introduce specific treatment for the recognition of moratoria, considering the existing framework already provides sufficient flexibility. The guidelines will now be translated into the official EU languages and published on the EBA website. They will apply from three months after the date of publication. Competent authorities must report on whether they comply with the guidelines within two months after the publication of the translations.

The European Banking Authority (EBA) has published a consultation paper containing draft regulatory technical standards (RTS) amending Commission Delegated Regulation (EU) 2021/598 supplementing the Capital Requirements Regulation (EU) No 575/2013 (CRR) with regard to RTS for assigning risk weights to specialised lending exposures under the supervisory slotting criteria approach (SSCA).

The proposed amendments aim to: (i) align the existing RTS with changes introduced by Regulation (EU) 2024/1623 (CRR3), including updated definitions and terminology; (ii) clarify how environmental, social and governance (ESG) risk factors should be taken into consideration when applying the SSCA; and (iii) simplify and harmonise the application of the assessment criteria by leveraging on the supervisory experience gathered since the publication of the original RTS. This includes several clarifications, in particular in the annexes where several criteria are amended, streamlined or complemented by specifying new sub-factors or sub-factor components. The deadline for comments is 7 August with a public hearing scheduled for 27 May.

The Capital Requirements Regulation (Market Risk Transitional Provision) Regulations 2026 (which were made on 29 April) has been published, together with an explanatory memorandum. The Regulations relate to changes to the UK implementation of Basel 3.1. They insert a new Article 465A into the UK Capital Requirements Regulation as a transitional provision relating to the UK Prudential Regulation Authority's (PRA) internal model approach rules. This means that credit institutions and designated investment firms will not be required to apply the PRA's market risk rules on updated internal model requirements during the transitional period between 1 January 2027 and 31 December 2027. The PRA rules will allow institutions to continue to use their existing models during this transitional period until 1 January 2028. The draft version of the Regulations was published in March. The Regulations will come into force on 30 December.

The Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026 were published with an 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 make amendments to support the transition away from retained EU law by ensuring that key prudential definitions continue to be set out in domestic legislation ahead of the revocation of relevant provisions in the UK CRR. The draft version was laid before Parliament in March. The Regulations enter into force on 1 January 2027.

The European Banking Authority (EBA) has published a decision confirming it has streamlined its guidelines on connected clients as defined under the Capital Requirements Regulation, by partially deleting certain sections following the entry into force of Commission Delegated Regulation (EU) 2024/1728. This Delegated Regulation introduces binding regulatory technical standards specifying when institutions must identify groups of connected clients, rendering some existing guideline provisions redundant. As a result, the EBA has removed those elements of the guidelines that are no longer necessary. The decision is accompanied by a consolidated version of the guidelines, reflecting the partial deletions and applies to credit institutions across the EU.

The European Banking Authority (EBA) has updated the list of correlated currencies in accordance with the technical standards mandated by Article 354 of the EU Capital Requirements Regulation (Regulation (EU) No 575/2013) (CRR). Article 354 allows institutions to provide lower own funds requirements against positions in relevant closely correlated currencies.

The EBA updated the list by way of a draft Implementing Regulation amending the relevant technical standards (which are set out in Implementing Regulation (EU) 2015/2197), with an Annex confirming the revised list. The update is intended to ensure that the listed currency correlations continue to reflect actual market conditions and is based on the EBA's latest assessment using data up to 31 March 2025. The amendments do not introduce any methodological or substantive policy changes, but instead apply the existing framework in Implementing Regulation (EU) 2015/2197 to an updated data set. Once adopted, the Amending Implementing Regulation will replace the current Annex to Implementing Regulation (EU) 2015/2197 and will enter into force on the 20th day following publication in the Official Journal of the European Union. The revised list has been submitted to the European Commission for endorsement, as confirmed in the EBA's press release.