The Bank of England has announced a further delay to the implementation of crucial post-financial crisis banking reforms, pushing back the deadline to January 2027 amid uncertainty over US plans and growing pressure to support economic growth.

The Prudential Regulation Authority (PRA), which made the decision after consulting with HM Treasury, said the year-long delay to the Basel 3.1 rules would "allow more time for greater clarity to emerge about plans for its implementation in the United States."

The postponement marks the third delay to the reforms, which form the final set of international banking regulations designed to prevent another global financial crisis. The PRA had previously pushed back the implementation date by six months to January 2026.

The decision comes as Rachel Reeves, the chancellor, increases pressure on UK regulators to focus more on supporting economic growth. On Thursday, she summoned chief executives of various watchdogs to Downing Street, though the PRA was not present at this meeting.

Bank of England deputy governor Sam Woods had earlier this month cautioned against participating in what he called a "race to the bottom" on financial regulation. However, the central bank noted it was taking into account "competitiveness and growth considerations" in its decision.

The reforms have faced significant opposition from banks in the United States, where Travis Hill, the potential next head of US banking regulation under incoming president Donald Trump, has outlined plans for lighter touch regulation and indicated he would reconsider the capital rules.

The European Union introduced most of the new rules this month but delayed implementation of regulations affecting banks' trading business until 2026, while Switzerland proceeded with implementing all rules in January.

British banks showed modest market gains following the announcement, with Barclays rising 0.8 per cent, Lloyds up 0.5 per cent, and HSBC increasing 0.1 per cent.

As part of the delay, the PRA announced it would pause its planned data collection exercise, which was originally due by 31 March 2025. This exercise was intended to inform a review of firm-specific capital requirements that would align with the Basel 3.1 implementation.

The regulator maintained that the date for full implementation would remain at 1 January 2030, with transitional periods being reduced to accommodate the new start date.

The decision highlights growing tensions between regulatory prudence and international competition. Steven Hall, a partner in KPMG UK's financial risk management practice, said: "As the PRA announces a further delay to the implementation of Basel 3.1, we are seeing the consequences of the interaction between prudential safety and the international competitiveness agenda play out in public."

He noted that while the EU has largely implemented its regulations, with some provisions taking effect from 1 January this year, the divergent timelines between the UK, US and EU create uncertainty for banks. "For UK banks, this leaves them time to either 'do things properly', or take their foot off the gas, expecting further delays down the line," Hall added.

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