Firms should make permission requests as soon as possible to increase likelihood of approvals ahead of 1 January 2026. This includes permission to use the risk sensitive approach in the Credit Risk Standardised Approach to unrated exposures, which will bring very significant risk weight benefits. The PRA recommended that firms discuss their intentions to make permission requests with the regulator before applying. The dates for permission applications can be found below:
Risk Category | Permissions | Best Before |
Credit Risk SA | Risk-sensitive approach for unrated corporates | 31 March 2025 |
Credit Risk IRB | IRB Model Permissions | 31 March 2025 |
Market Risk | IMA Permissions | 1 January 2025 |
| SA-CVA Permissions | 1 January 2025 | |
Output Floor | Overseas Groups to be Treated as International Subsidiaries | 1 March 2025 |
The PRA has now confirmed it will conduct an off-cycle review of Pillar 2 capital requirements through data collection from firms in the scope of the Basel 3.1 changes. The regulator’s aim is twofold:
For the collection, the PRA has drafted two data submission templates which firms should complete and indicate any permissions they will seek to apply for, and the timing of these applications. The dates and additional information for the data collection can be found below:
| Submission | Data required | Reference date | Best before |
Submission 1: Total Basel RWAs template | Breakdown of credit, CVA, market and operational risk RWAs which have been calculated based on rules in PS17/23 and PS9/24 | Firms should use data from 31 December 2024 | 31 March 2025 |
Submission 2: SME lending adjustment and infrastructure lending adjustment template | Breakdown of relevant credit risk exposures, by applicable risk weight and sub-exposure class based on rules in PS9/24 | Firms should use data from 31 December 2024 | 31 March 2025 |
For further insight on your Basel 3.1 implementation plan, watch our recent webinar on Basel 3.1 operational priorities.
To speak to one of our Prudential Risk experts about any aspect of Basel 3.1, including your implementation plan, get in touch using the button below.
Firms are expected to have a comprehensive Basel 3.1 implementation plan to support the quality of the upcoming data submissions and to ensure smooth operationalisation of the incoming regulatory regime. We encourage firms to focus on capital impact assessment, data governance and people and transformation priorities. Furthermore, it is imperative firms understand how Basel 3.1 fits within the wider...
On 1 January 2026, the Prudential Regulation Authority (PRA) is implementing the biggest changes to the capital regime for banks in over a decade. This reform package is commonly known as Basel 3.1.
The Policy Statement (PS9/24) contains the long-anticipated near-final policy proposals for Credit Risk and Output Floor under the forthcoming Basel 3.1 framework. We have outlined the key points from this Policy Statement for firms.
In this series of short bitesize articles, our Prudential Regulation Consulting team delves into the implications of Basel 3.1 changes on banks.
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