The European Commission has adopted temporary adjustments to the EU’s implementation of the Basel III market risk framework in a move aimed at protecting the competitiveness of European banks in global markets.
The changes concern the Fundamental Review of the Trading Book (FRTB), a key component of the Basel III standards designed to strengthen how banks measure and capitalise trading risks. While the EU fully implemented the rest of the Basel III package in January 2025, delays by other major jurisdictions in applying the FRTB have raised concerns that EU banks could face higher capital burdens than international rivals.
To address the issue, the Commission introduced targeted and time-limited amendments through a delegated act under the Capital Requirements Regulation. The measures include a multiplier mechanism intended to offset part of the capital impact for EU banks affected by the new rules. The adjustments will apply for three years from 1 January 2027.
The Commission said the decision is intended to maintain a level playing field for EU banks active in international capital markets while supporting the objectives of the EU’s Savings and Investments Union. Brussels also noted that several major jurisdictions are expected to postpone FRTB implementation for at least another year.
Financial Services Commissioner Maria Luís Albuquerque said the measures would help ensure that European banks can compete “on equal terms with their international peers” while preserving the EU’s commitment to Basel standards.
The delegated act will now be reviewed by the European Parliament and the Council. If neither institution objects during the scrutiny period, the measures will enter into force at the start of 2027.
