The European Union isn’t scrapping its bank capital rules. It’s just hitting the snooze button on them.

An EU official clarified on March 18 that the bloc plans only a temporary adjustment to a contentious bank capital requirement under Basel III, not a permanent removal. The move is designed to keep European banks competitive while other major economies, notably the US and UK, take their sweet time implementing the same international standards.

What’s actually changing

At the center of this is the Fundamental Review of the Trading Book, or FRTB. Think of it as a massive overhaul of how banks calculate the capital they need to hold against their trading activities.

The EU’s plan involves introducing a temporary multiplier that would offset some of the capital increases banks would face from full FRTB implementation. In English: European banks won’t have to set aside quite as much money as the rules originally demanded, at least not yet.

This isn’t a free pass. The multiplier is expected to take effect on January 1, 2027, and expire on December 31, 2029. The formal adoption of the targeted amendments through a delegated act is expected around June 4, 2026.

The EU already pushed back some Basel III elements in July 2024, postponing certain provisions to January 2026.

The competitive angle

The logic behind the temporary relief is straightforward. If European banks have to hold significantly more capital against their trading books while American and British competitors don’t face the same requirements yet, EU institutions are playing with a handicap.

Major banks like Deutsche Bank, BNP Paribas, and Barclays all stand to benefit from the breathing room. These institutions run massive trading operations, and the capital calculations under FRTB can materially change how much firepower they have available for market-making, lending, and other activities that drive revenue.

Brussels essentially looked at its peers, saw them not rushing to comply, and decided it would be strategically unwise to be the only jurisdiction playing by the strictest interpretation of the rules. The temporary multiplier threads a needle: the EU maintains its stated commitment to international banking standards while acknowledging the practical reality that no one else is fully implementing them either.