The Bank of England’s Prudential Regulation Authority has set out the first of two “near-final” policy statements covering the implementation of Basel 3.1 standards for lenders in the UK.

These standards cover the amount of capital banks need to hold against the risks they take and are agreed at international level by the Basel Committee on Banking Supervision.

In a statement today (12 December), the PRA said the requirements will be “low” and result in an average increase in Tier 1 capital requirements for UK firms of around 3%, once fully phased in.

This is lower than the European Banking Authority’s estimate of a Tier 1 increase of around 10% in the EU and the US agencies’ estimate of a CET 1 increase of around 16% for US firms, it said.

The regulator said it had adjusted its original proposals in a range of areas following a consultation where respondents provided evidence suggesting they did not “appropriately and proportionately reflect risks”.

Amendments were also made to facilitate policy implementation where feedback suggested “prudent but less burdensome” alternative approaches were available, enhance the relative standing of the UK as a place for internationally active firms to operate and improve the clarity of rules.

Sam Woods, deputy governor of prudential regulation and CEO of the PRA, said: “The rules published today implement the latest Basel standards in the UK and include appropriate adjustments to take on points raised by respondents to our consultation.

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