UK PRA final policy on implementation of Basel 3.1 standards

The UK Prudential Regulation Authority (PRA) has published final policy statement PS21/6 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. Alongside this policy statement, the PRA also published final policy, rules and supervisory expectations on a number of related banking capital frameworks (see updates below). 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. The PRA also finalised its policy on structural foreign exchange (FX) positions, confirming that items held at historical FX rates are excluded from Pillar 1 FX capital requirements, while providing updated guidance on structural FX permissions and contingency FX risk. Aside from these adjustments, the PRA has made only non‑substantive corrections and clarifications relative to its near‑final rules in PS17/23, PS9/24 and PS7/25, with firms expected to comply with the full Basel 3.1 reporting and disclosure regime from 1 January 2027.

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