Why the EU faces a tough call on new banking rules as US and UK waver

Good morning. If you haven’t yet read that story of how senior US officials, including the vice-president and defence secretary, accidentally shared classified details about last week’s bombing of Yemen with a journalist in an unofficial messaging group, it’s an absolute marmalade-dropper. Sticking to the standard Trumpworld script, they accused Europeans of being “freeloaders” who should be sent the bill for keeping the Red Sea open for trade.

Today, our finance correspondent reports on Brussels’ options for new global banking regulations as the US and UK wobble on implementation, and our parliament correspondent hears a call for all EU citizens to be told to prepare for war.

Basel blues

As the US swings the axe at global banking regulations that have shielded markets from financial crises, the EU ponders its own way forward, writes Paola Tamma.

Context: The global banking rules known as Basel III, agreed in the aftermath of the 2008 global financial crisis, call for higher capital requirements for banks. The regime, formulated by a committee based in the Swiss city, has recently been updated, but not yet implemented in the US.

Federal Reserve chair Jay Powell has already indicated that the US is likely to take a less stringent approach than its original proposals published last year. 

What the US does matters: The UK has already postponed stricter capital rules until 2027 to get more clarity on what’s happening across the Atlantic.

Meanwhile in the EU, the reviewed Basel rules started applying earlier this year, though Brussels has pushed back implementation of specific capital rules applying to banks’ wholesale trading activities — the so-called fundamental review of the trading book (FRTB) — to January 1 2026.

Now, Brussels must decide what to do with its FRTB timeline. If it sticks to implementing the rules earlier and in a stricter fashion than other countries, this could put its large investment banks at a disadvantage to their British or American competitors.

Yesterday, the European Commission launched a consultation to sound out the industry’s views on three options, including postponing the FRTB by one more year to align with the UK’s 2027 timeline.

Another option is making “temporary and targeted amendments . . . to address aspects of the framework on which other jurisdictions have already deviated or indicated that they would plan to deviate”.

Or, option three, sticking to the rules and the 2026 timeline as planned — which is the least likely option.

The industry’s preferred option would be a one-year delay, aligning it with the UK and giving Brussels time to ponder additional tweaks to the rules.

A proposal is due by June.

Chart du jour: Perks

An increasing number of people think their countries have benefited from joining the EU, according to the yearly Eurobarometer survey published today.

Get ready

Brussels should prepare a guide for every EU household on how to get ready for war, weather catastrophes and pandemics, EU parliamentarians wrote in a letter seen by Andy Bounds.

Context: Brussels is set to present its first “preparedness” strategy tomorrow, inspired by measures implemented by Nordic countries in the face of threats from Russia — which the rest of the EU have woken up to much later.

Members of the liberal Renew group in the European parliament have written to European Commission president Ursula von der Leyen to suggest such a hands-on guide, modelled on a similar one in Finland, Sweden, Denmark and Norway.

“This guide would inform citizens about voluntary civic commitment and practical steps they can take to prepare for various crises, including potential conflicts, climate disasters, pandemics, and cyber threats,” says the letter.

It would suggest basic supplies to have at home, how to stay safe in a crisis and how to respond to cyber threats.

“The Finnish model of comprehensive security and national preparedness needs to be rolled out across Europe and the European Commission can play a role here in sharing best practices,” said Anna-Maja Henriksson, a Finnish MEP. “As Europeans, we are only as resilient as our weakest link.”

But the plan to be rolled out tomorrow is unlikely to include concrete measures for citizens on, say, what to stockpile for a crisis. “It is broad,” said an EU official. “The main thing is to move from a reactive mode to a proactive mode — how to keep countries running in a crisis.”

They cautioned that most of its 50-plus actions would have to be taken by national governments, as they fell outside EU competences.

What to watch today

1. European Commission president Ursula von der Leyen and EU Council president António Costa meet Serbian President Aleksandar Vučić in Brussels.

2. Informal meeting of EU health ministers in Warsaw.

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