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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Specifically:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The European Central Bank (ECB) has contributed to the EU's ongoing simplification agenda by endorsing a series of recommendations for simplification of the EU prudential framework. A total of 17 recommendations were made by the ECB's High-Level Task Force on simplification across the regulatory, supervisory and reporting frameworks. Key proposed changes include: reducing the number of capital stack elements in the EU risk-weighted framework; expanding the scope of small banks that would qualify for a simplified regulatory framework as small and non-complex institutions (SNCI); giving the ECB Governing Council responsibility for taking a holistic view of the overall level of capital demand across the banking union; and completing the banking union, including finalisation of the European Deposit Insurance Scheme.

Although the recommendations advocate for simplification, they are based on core principles that resilience should be maintained, supervisory bodies should be able to meet their prudential objectives and international standards should be upheld. The ECB will present the recommendations to the European Commission, which is expected to present a report on the banking system in 2026.

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The European Systemic Risk Board (ESRB) has published a report accompanied by an annex, proposing to simplify its legislative tasks following a review by the High-Level Group. The ESRB currently performs around 90 tasks under EU law beyond its Regulation. Using a new scoring framework whereby tasks with lower scores may be discontinued, whereas tasks with higher scores remain unchanged, the ESRB identified approximately 30 tasks for discontinuation or streamlining, primarily by removing legal references or reducing involvement thresholds. The assessment is presented in detail in the annex.

These proposals build on previous ESRB recommendations in its 2022 Concept Note and discussions at the March 2025 European Commission Expert Group on Banking, Payments and Insurance, which called for: (i) a proportional approach to sectoral systemic risk buffer rates aligned with total risk exposure amounts; (ii) consolidation of the Capital Requirements Regulation provisions on macroprudential risk weights (Articles 124, 164 and 458) into a single section or article with simplified activation procedures; and (iii) mandatory reciprocation for systemic risk buffer and Article 458 measures, subject to materiality thresholds. The ESRB's proposals will be submitted to the EC for consideration as part of targeted legislative amendments.

Commission Implementing Regulation (EU) 2025/2303 has been published in the Official Journal of the European Union. The Regulation lays down updated implementing technical standards on procedures, standard forms and templates for the provision of information required for resolution plans under the Bank Recovery and Resolution Directive (BRRD) (Directive 2014/59/EU). This Regulation repeals Implementing Regulation (EU) 2018/1624 and introduces a revised set of templates to enhance harmonisation of reporting obligations across the EU, reflecting amendments to BRRD and the experience gained by resolution authorities. Key changes include: (i) differentiated reporting requirements for resolution entities, liquidation entities, and entities belonging to resolution groups; (ii) thresholds for identifying relevant legal entities; (iii) adoption of a single data point model subject to common validation rules, and provisions to avoid duplication of data collection between competent and resolution authorities. The Regulation will apply from 30 December.

The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) amending Delegated Regulation (EU) 2023/206 which supplements Regulation (EU) No 575/2013 (CRR). The EBA is mandated by Article 124(11) of the CRR to draft RTS which specify: (i) the types of factors to be considered by national authorities in assessing the appropriateness of the risk weights for exposures secured by immovable property; and (ii) the conditions to be considered for the assessment of the appropriateness of minimum loss given default values for exposures secured by immovable property. The only amendment identified to the existing RTS is an update of relevant legal references to align with the revised CRR (CRR3) framework. Following the April consultation, no changes were made to the draft RTS noting no responses were received. The RTS will now be submitted to the European Commission for endorsement before being published in the Official Journal of the European Union.

Commission Implementing Regulation 2024/2475 has been published in the Official Journal of the European Union (OJ). The regulation makes amendments in relation to the implementing technical standards (ITS) on operational risk supervisory reporting of institutions for the purposes of article 430(7) of the Capital Requirements Regulation (CRR). The ITS specify uniform reporting formats and IT solutions, including instructions, for supervisory reporting requirements of institutions. The current ITS were revised in the context of the Basel III reforms and the resulting CRR amendments, with an earlier implementing regulation setting out the incoming replacement ITS, and repealing the existing ITS, published in the OJ last year. This current implementing regulation extends certain transitional provisions to reflect the postponement of the date of application of the incoming CRR own funds requirements for market risk to 1 January 2027, and to delay the repeal of the existing ITS. The implementing regulation will enter into force on 29 December.

The UK Financial Conduct Authority (FCA) has published an updated webpage confirming that following the closure of its consultation on capital deductions for redress (CP23/24), it will not proceed with the proposed capital deduction for redress framework. This decision reflects a realignment of regulatory priorities in light of broader changes affecting the advice market. The FCA expects firms to continue addressing redress liabilities under existing rules, including the consumer duty, and warns that it may intervene where firms fail to meet these expectations or pose a risk of harm. Supervisory focus will include provisions for redress liabilities in client book transfers and challenging firms at the gateway, with firms expected to adhere to the FCA's "polluter pays" principle as outlined in its prior communications.

The UK Prudential Regulation Authority (PRA) has published policy statement PS27/25 following its September consultation setting out proposals to delete certain regulatory reporting requirements for banks, building societies and designated investment firms. The consultation was part of the PRA's work to reduce the regulatory burden for those PRA-regulated firms under the regulator's future banking data review and focused on Financial Reporting (FINREP) templates. The policy statement confirms the deletion of 37 templates (as per the consultations proposals) and notes in particular feedback from respondents regarding further reforms under the future banking data review workstream. The revised rules and amended guidance will come into effect on 31 December and will apply to reporting reference dates that fall on that day.

The UK Prudential Regulatory Authority (PRA) has published a policy statement confirming the complete withdrawal of supervisory statement SS20/15 on building societies' treasury and lending activities, without replacement. Following the May consultation, the final policy largely remains unchanged. The PRA concludes that SS20/15 is no longer aligned with its broader policy approach, it creates a potential level-playing field issue by imposing prescriptive expectations on building societies that do not apply to banks, and is unnecessary given the sector's improved risk management sophistication and existing supervisory tools. The policy also makes consequential amendments to SS31/15 (ICAAP and SREP) and clarifies that ongoing risk management expectations for building societies will align with those applicable to banks under other supervisory statements. Following consultation feedback, the PRA brought forward the implementation date of 1 January 2026, with the withdrawal now effective immediately from publication.

The European Banking Authority (EBA) has launched a consultation on draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the revised Capital Requirements Directive (CRD VI) concerning prudentially material transactions. The RTS specify the minimum information to be provided, common assessment methodology, and processes for notifications and prudential assessments of material acquisitions, transfers of assets or liabilities, mergers, and divisions, while the ITS establish common procedures, forms and templates for cooperation between competent authorities. The draft RTS embed proportionality by exempting information already held by authorities, using documents prepared for mergers or divisions under the Company Law Directive, coordinating with related procedures (e.g., authorisation of credit institutions where the merger requires a new licence), and allowing flexibility for divisions given their rarity.

In the absence of a materiality threshold in the CRD, they also introduce some proportionality criteria for notifications and assessments, especially for mergers involving small, non-complex or intra-group institutions, to streamline implementation of the merger. Building on common information requirements and terminology, the RTS clarify complex aspects and supplement Level 1 provisions. The deadline for comments is 5 March 2026, with a virtual public hearing scheduled for 4 February 2026. Final draft RTS and ITS are due for submission to the European Commission by July 2026 (RTS) and January 2027 (ITS).

The Basel Committee on Banking Supervision (BCBS) has launched a consultation on introducing a standard format for machine-readable Pillar 3 disclosures by internationally active banks. Most banks currently publish their disclosures in PDF format only, which makes it difficult to aggregate, process and compare data across banks. The proposal aims to enhance accessibility and comparability of key risk metrics by requiring quantitative disclosures to be published in a standardised machine-readable format, without altering existing disclosure requirements. National supervisors would determine whether banks should publish machine-readable Pillar 3 disclosures on their own websites or via a centralised data repository. The deadline for comments is 5 March 2026.

The Bank of England (BoE) has launched its second system-wide exploratory scenario (SWES) exercise, this time focused on the private markets ecosystem. It will be run in collaboration with a group of banks and NBFIs active in these markets. Its aim is to better understand how banks and non-banks active in private markets would respond to a severe but plausible global downturn, how their actions interact at a system level, and whether these interactions can amplify stress across the financial system and pose risks to UK financial stability and the provision of finance to the UK real economy. The exercise is not a test of the resilience of the individual firms that will participate in the exercise. Its focus is system wide, exploring the resilience of the provision of private market and related public market finance to the UK corporate sector. It will focus on private equity (PE) sponsored UK corporates, credit originated to finance these corporates (including leveraged loans and high-yield bonds) and broader private credit (PC) provided to the UK corporate sector. The SWES will aim to include key participants in the private markets ecosystem. This includes alternative asset managers that manage PE and PC funds; large banks that provide credit to both private market funds and PE-sponsored corporates; and institutional investors that participate in private markets and related public markets. The BoE anticipates having largely completed firm engagement and analysis in 2026, with the final report to be published in early 2027 and interim findings over the course of 2026.

The UK Prudential Regulation Authority (PRA) has published a policy statement and supervisory statement SS4/25, updating expectations for banks and insurers on managing climate-related financial risks. The final policy replaces SS3/19 in its entirety and applies with immediate effect. Following feedback from the April consultation, the PRA makes changes to the final policy (i) clarifying proportionality, allowing firms to tailor governance and risk management based on materiality and business models; (ii) recognising litigation risk as a potential transmission channel; and (iii) confirming that the six-month review period is to conduct an internal gap analysis, not an implementation timeline. Firms may integrate climate responsibilities within existing governance frameworks and embed climate risks into current risk registers or sub-registers, with flexibility in approach. The PRA emphasises a principles-based, proportionate framework aligned with international standards, encouraging scenario analysis, reverse stress testing and engagement with the Climate Financial Risk Forum (CFRF).

The European Banking Authority (EBA) has published a consultation paper on draft amendments to the regulatory technical standards (RTS) under Delegated Regulation (EU) 2017/390, supplementing the Central Securities Depositories Regulation (CSDR) prudential framework. The changes respond to the CSDR Refit (Regulation (EU) 2023/2845), which now permits banking CSDs to provide banking-type ancillary services to participants of other CSDs, including foreign currency cash settlement. This expansion introduces potential credit, liquidity, and concentration risks, prompting the EBA to propose updates to prudential requirements, including enhanced frameworks for intraday credit and liquidity risk management, credit limits and collateral management. The draft RTS also aligns references with amendments made to the Capital Requirements Regulation. The deadline for comments is 3 March 2026.

The Bank of England's (BoE) Financial Policy Committee (FPC) has published a Financial Stability in Focus report, revisiting its assessment of bank capital requirements. The FPC now judges that the appropriate benchmark for the system-wide level of Tier 1 capital requirements is around 13% of risk-weighted assets, equivalent to a Common Equity Tier 1 (CET1) ratio of around 11%. This represents a reduction from the 2019 assessment, which set the benchmark at 14%, reflecting improvements in risk measurement, a lower systemic importance of some banks, and a decline in banks' average risk weights.

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The UK Prudential Regulation Authority (PRA) has published a letter addressed to credit union directors. It summarises key findings from its 2025 assessment of credit unions with assets up to GBP50 million and sets out supervisory priorities for 2026. The PRA identifies operational resilience as a key risk, with thematic work planned in 2026 to strengthen this area, including contingency planning and ensuring robust arrangements for replacing key staff and directors. The second key risk highlighted is disorderly failure: boards are expected to monitor prudential positions and financial forecasts proactively, act promptly on emerging issues and consider alternatives where activities become unsustainable, to avoid disorderly wind-down. In addition to these priorities, the PRA will maintain a focus on risk management throughout 2026. Governance standards also remain a priority, with emphasis on reducing dependency on key individuals and improving risk oversight. Areas for continued attention include succession planning, policy reviews, business planning and board performance appraisals (noted as a non-exhaustive list). The PRA reminds credit unions of their regulatory obligations, including maintaining open and cooperative engagement under Fundamental Rule 7. The letter should be read alongside the January Dear CEO letter to UK deposit takers, which outlines the PRA's priorities in this sector.

The UK Financial Conduct Authority (FCA) has published findings from its data quality review of prudential regulatory reporting by MIFIDPRU investment firms, covering submissions from January 2024 to March 2025. The FCA found that 60% of firms passed all data quality tests and saw good practice in reporting across time periods and accurate cross-validation returns. However, the FCA identified significant areas for improvement firms, including: (i) inconsistent reporting across multiple data sources; (ii) inaccurate implementation of reporting guidance; (iii) incorrect reporting of type of investment firm; and (iv) incorrect reporting units and data entry issues. From the 10% of firms that were not meeting their reporting requirements, the FCA found recurring reporting errors, indicating weaknesses in these firms' regulatory systems and controls.

The FCA urges firms to review their reporting processes against the relevant provisions in its Handbook, including MIFIDPRU 9 Annex 2, and ensure accuracy, noting that no new requirements or guidance are being introduced. Notifications highlighting data quality failures will be issued to firms and further detailed examples of data quality issues the FCA has seen will be shared in an upcoming IFPR Newsletter.

The European Banking Authority (EBA) has published a peer review report assessing how competent authorities have implemented and supervised gender diversity requirements. EU legislation requires that credit institutions have robust governance arrangements, including gender-neutral remuneration policies and diversity policies. The review examined six competent authorities, including the European Central Bank, on the application of the respective requirements under the fourth Capital Requirements Directive (CRD IV), the Capital Requirements Regulation and certain EBA guidelines across six major areas. It found that most requirements checked have been fully or largely incorporated into the supervisory framework by all supervisors reviewed.

However, deficiencies were noted, particularly in the use of supervisors' own benchmarking of diversity practices, where three supervisors were rated "partially applied" overall, with five out of six supervisors being rated "partially applied" on the second criteria of that benchmark, which concerns the further use of own diversity benchmarking results. The EBA recommends improvements in collecting and publishing supervisors' benchmarking results to enhance transparency and to improve the ability of credit institutions to compare with their peers. Both individual and general follow-up measures, as well as best practices have been adopted to strengthen consistency and effectiveness across the EU. The EBA will conduct a follow-up peer review of the implementation of the measures included in the report in two years.

The European Banking Authority (EBA) has published a fact sheet summarising the findings from its 2025 mapping exercise on the interaction between the EU AI Act (Regulation EU 2024/1689) and existing banking and payments legislation. This includes the Capital Requirements Regulation (575/2013), the Consumer Credit Directive (2008/48/EC), the Mortgage Credit Directive (2014/17/EU) and the Payment Services Directive ((EU) 2015/2366). The EBA's key findings include: (i) no significant contradictions have been found between the AI Act and EU banking and payment legislation; (ii) the AI Act is complementary to EU banking and payment sector legislation, which already provides a comprehensive framework to manage risks. However, some efforts may be required by banks and other financial institutions to integrate the two frameworks effectively; and (iii) the co-existence of multiple authorities supervising financial entities' compliance highlights the importance of supervisory cooperation to ensure effective implementation of the AI Act.

The EBA also concludes that no immediate changes to its guidelines or new EBA guidelines are planned. Instead, the EBA will follow up with actions to contribute to a common supervisory approach to supervisory cooperation and implementation of sectoral requirements alongside AI Act requirements. The EBA will undertake specific activities in 2026–2027 to support the implementation of the AI Act in the EU banking and payments sector by: promoting common supervisory approaches and cooperation among national competent authorities responsible for financial sector supervision and market surveillance authorities; and providing input to the AI office, as appropriate, and participating in discussions of the AI Board Subgroup on Financial Services.

Commission Implementing Regulation (EU) 2025/2338 (Amending Regulation) has been published in the Official Journal of the European Union. The amendments update the implementing technical standards (ITS) under Commission Implementing Regulation (EU) 2016/100, which govern the joint decision process for competent authorities when granting permission to use internal models for credit risk, counterparty credit risk and market risk for prudential purposes for certain entities in banking groups, as required by Article 20(8) of the Capital Requirements Regulation (CRR). The Amending Regulation introduces three key changes: (i) the removal of the Advanced Measurement Approach for operational risk, reflecting amendments to the CRR by CRR III (Regulation (EU) 2024/1623); (ii) the alignment with new RTS and ITS on the functioning of supervisory colleges that were published in August (Commission Delegated Regulation (EU) 2025/791 and Implementing Regulation (EU) 2025/790); and (iii) Commission Delegated Regulation (EU) 2025/1496, which sets out that the current requirements on the calculation of own funds requirements for market risk will apply until 1 January 2027. The Amending Regulation enters into force on 11 December.

The Basel Committee has published a summary of its latest meeting in which members discussed a range of initiatives. The Committee reaffirmed its commitment to full and consistent implementation of Basel III standards and approved final principles for managing third-party risk in banking, which will be released next month. It also agreed to expedite a targeted review of its prudential standard for banks' cryptoasset exposures in response to market developments. Other priorities include examining synthetic risk transfers (SRTs), consulting on machine-readable Pillar 3 disclosures (expected in December) and consolidating guidelines into a more user-friendly format. The Committee also approved assessment reports on the UK implementation of the net stable funding ratio and large exposures framework, which are expected next month, and committed to pursue further analytical work of financial risks from extreme weather events.

The European Central Bank (ECB) has published the results of its 2025 supervisory review and evaluation process (SREP) and supervisory priorities for 2026–2028. The review covers 105 banks under ECB supervision and looks at their capital, liquidity, profitability, governance and risk management. Overall, banks maintained robust capital and liquidity positions and strong profitability in the second quarter of 2025.

Looking ahead, the ECB's supervisory priorities for 2026–2028 reflect a comprehensive assessment of emerging risks and vulnerabilities for supervised entities. Each supervisory priority targets a specific set of vulnerabilities in the banking sector for which dedicated strategic objectives have been set and tailored work programmes developed.

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The European Commission (EC) has published a call for evidence on a proposed Delegated Act to amend market risk rules under the Fundamental Review of the Trading Book (FRTB) in Basel III. This follows the November consultation where responses are due by 6 January 2026. Although most Basel III requirements have applied since January, the EC postponed FRTB implementation on several occasions and most recently to 1 January 2027 due to delays and uncertainty regarding FRTB implementation in other major jurisdictions. As a result, the EC is evaluating whether to use the empowerment granted under Article 461a of the Capital Requirements Regulation, to adopt a Delegated Act to mitigate potential negative impacts arising from an unlevel playing field in the international implementation of the FRTB. It would also aim to incorporate those targeted changes already proposed by other jurisdictions that the EC believes can improve the EU framework (e.g. removing excessive rigidity and preventing excessive operational burden on banks). The deadline for responses is 18 December.