UK Basel 3.1: Credit risk standardised approach – exposures to multilateral development banks (MDBs)
On 30 November 2022, the Prudential Regulation Authority (PRA) published a Consultation Paper 16/22 (CP16/22) proposing the implementation of Basel 3.1 standards. The framework was originally proposed to be implemented on January 1, 2025. However, according to the news release dated September 27, 2023, the revised implementation date is July 1, 2025. A brief summary of the changes proposed to ‘exposures to multilateral development banks’ (MDBs) under the credit risk standardised approach is provided below.
Key changes to exposures to MDBs (Article 117), under the standardised approach, include:
Risk weights as per CQS are introduced for externally rated MDBs (excluding those MDBs eligible for a 0% risk weight).
A risk weight of 50% would apply to unrated MDBs.
A summary of the proposed classifications and applicable risk weights is given below:
Existing and proposed Risk Weights
