The European Union has completed the final piece of its Basel III banking package, a regulatory framework that’s been in the works since the 2007-09 financial crisis.
The EU’s banking package officially took effect on July 9, 2024, with most of the substantive regulations applying from January 1, 2025. The European Banking Authority’s impact assessments had estimated that full Basel III implementation would require capital increases of 18-24%. That estimate prompted EU-specific adjustments designed to soften the blow.
Those adjustments reflect Europe’s particular economic structure, including heavy reliance on bank lending to small and medium-sized enterprises.
The FRTB problem and the competitiveness question
The Fundamental Review of the Trading Book, or FRTB, governs how banks calculate capital requirements for their trading activities. The FRTB was initially scheduled for implementation in 2026 but has faced multiple postponements, with potential further delay to January 2027.
