Rob Smith, Head of Financial Services Regulatory & Risk Advisory Services at KPMG UK, comments on the EU’s latest provisional agreement of the Basel 3.1 reforms:
“This agreement is a landmark decision that has taken a great deal of time to get to, and work now needs to begin in earnest.
“Given the current geopolitical and economic climate, some leaders in the industry are concerned that it’s a case of the ‘right change, at the wrong time’ and it will be interesting to see how closely the UK and US follow these rules. Regulators will hope the implementation of the changes in the current climate do not become a material distraction from day-to-day operations and risk management.
“Much of the detail is yet to be announced but some of the new additions go beyond the original proposals, such as the transitional cryptoasset prudential requirements and ESG risk management. There are also hints that the standards are far from final given the inclusion of a range of safeguards to enable legislation to be reviewed if ‘un-level playing fields arise’ following other jurisdictions' implementation of the changes.
“The proposed transition timeline could be unrealistic for the UK and US who may opt for a later deadline, phasing in changes after 2025.”
