Basel 3.1 Implementation Guide

16 Oct

The Prudential Regulation Authority (PRA) has confirmed that Basel 3.1 will finally be implemented on 1 January 2027.

After years of debate, it’s easy to forget that this regulation is the last piece of the global banking reforms introduced after the 2008 financial crisis. Its purpose is to improve banks’ own measurements of risk, while standardising approaches between firms to make their capital ratios more consistent and comparable.

Although the final rules are still to come, many of our small- and medium-sized bank clients are already pressing ahead with the implementation roadmap using the near-final rules. This is sensible as Basel 3.1 will require significant changes to existing processes, systems and internal documentation and banks will face a variety of hurdles.

To explore these challenges further, on 22 September 2025 we hosted a roundtable with UK Finance, the PRA, and senior leaders from 15 small- and medium-sized UK banks. The discussion highlighted a range of pertinent topics and it was very informative to hear the PRA’s perspective.

Three themes stood out as central to successful implementation:

agreeing clear assumptions, interpretations and judgements of the new rules across the firm;
enhancing regulatory reporting data quality and establishing explicit materiality; and,
strengthening governance through Senior Management Function (SMF) accountability, robust management information (MI) and independent assurance.

This Basel 3.1 Implementation Guide builds on the insights from that roundtable and combines them with our own experience supporting clients through capital impact assessments, data and process gap reviews, and the development of Basel 3.1 assumptions and interpretations documentation.

We hope you find our guide helpful and wish you every success in your Basel 3.1 implementation.