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Basel 3.1

Basel 3.1 rules is currently proposed to be implemented in the UK from 1 July 2025, is a continuation of the post global financial crisis reform package that was initially implemented in 2013. The primary objective of the revisions in the current framework is to improve the reliability of capital ratios, by making standardised approaches more risk-sensitive, addressing limitations of Internal Models (IMs), and restricting the benefits that IMs can provide by introducing an ‘output floor’. This would improve both the measurement of risk and the comparability across firms.

Basel 3.1

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UK Basel 3.1: Near-final rules Phase 1 (PS17/23)

On 12 December 2023, the Prudential Regulation Authority (PRA) published near-final rules on the implementation of Basel 3.1 standards through Policy Statement 17/23 (PS17/23). PS17/23 covers near-final rules on market risk; credit valuation adjustment (CVA) and counterparty credit risk (CCR); operational risk; interactions with the PRA’s Pillar 2 framework; and, re-denominate currency references to pound sterling (GBP).

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UK Basel 3.1: An overview of the proposed changes

This article outlines an overview of the proposed changes, as part of UK’s implementation of Basel 3.1 (CP16/22).

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UK Basel 3.1: Market Risk

This article outlines the key changes to the calculation of market risk capital requirements as part of the implementation of Basel 3.1 standards (PS17/23).

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UK Basel 3.1: Reporting changes

This article outlines the proposed reporting changes, as part of UK’s implementation of Basel 3.1 (CP16/22).

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UK Basel 3.1: Credit valuation adjustment and counterparty credit risk

This article outlines the key changes to the calculation of Credit valuation adjustment and counterparty credit risk, as part of the implementation of Basel 3.1 standards (PS17/23).

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UK Basel 3.1: Operational risk - standardised approach

This article outlines the key changes to the calculation of own funds requirement for operational risk, as part of the implementation of Basel 3.1 standards (PS17/23).

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How can we help you?

Banks may face a variety of challenges when understanding or applying the new requirements, including assessing the impact on the Bank’s governance, systems, data sourcing, training etc. At Katalysys, we have a deep understanding of upcoming changes from the perspective of both regulatory rules and practical implementation.

Our team is supporting a range of clients in this area. Our support can be in the form of:

  • workshops or training to cover the new requirements;

  • gap/Impact analysis;

  • guidance on implementing industry best-practice in relation to Basel 3.1 standards;

  • documentation of the bank-specific assumptions and interpretation;

  • preparation of overall procedure notes;

  • validation of the systems/calculations; or,

  • review of the regulatory returns.