Policy Briefing — July 5, 2025
The PRA’s Basel 3.1 package applies from 1 July 2025, so firms need board-owned governance over output floors, model change evidence, and COREP/Pillar 3 submissions to satisfy supervisory reviews.
Executive briefing: PRA Policy Statement 17/23 finalised the UK implementation of Basel 3.1 standards, with the first tranche taking effect July 1, 2025. Large UK banks must adopt revised standardised credit risk weights, updated counterparty credit risk calculations, and initial output-floor percentages while embedding reporting changes to COREP and Pillar 3 templates. Transitional relief applies through 2030, but boards need to evidence capital planning and model governance aligned to Supervisory Statement (SS) 1/23 expectations.
Governance checkpoints
- Capital planning. Refresh ICAAP scenarios to reflect higher risk-weighted assets under the output floor, documenting management actions to preserve headroom.
- Model oversight. Update model inventory and change logs for internal ratings-based portfolios migrating to revised probability-of-default and loss-given-default floors.
- Regulatory reporting. Validate COREP taxonomy updates, particularly C 07.00 and C 08.07 templates, before the first reference date ending September 30, 2025.
Operational priorities
- Data lineage. Trace credit risk data inputs through risk data aggregation principles to satisfy PRA expectations on BCBS 239 alignment.
- Board engagement. Schedule July briefings for non-executive directors covering Basel 3.1 impacts, waivers, and disclosure obligations.
- Disclosure readiness. Prepare amended Pillar 3 templates, including new output-floor reconciliation tables, for publication with FY2025 results.
Sources
Zeph Tech supports Basel 3.1 readiness by synchronising capital planning analytics, COREP taxonomy changes, and board oversight artefacts ahead of the July go-live.