Basel III Prudential Roadmap: 2024 H2 feedback

Summary

This is a feedback paper from the Jersey Financial Services Commission summarising industry responses to its December 2024 consultation (CP No. 6 2024) on implementing Basel III in Jersey, covering the standardised approaches to credit risk (SACR) and operational risk (SAOR), and Large Exposures. It does not itself create new binding Code requirements, but confirms JFSC's intended approach and sets out a revised implementation timeline following the UK's own delay of Basel III to 1 January 2027.

• Who is affected: The proposals directly affect Jersey incorporated banks (JIBs); customers of Jersey banks may be indirectly affected through pricing and risk-weight changes.
• Approach confirmed: JFSC will closely follow the UK PRA's near-final rulebook (PRA PS9/24) for SACR and SAOR, and will develop Large Exposures proposals once the PRA finalises its own Large Exposures consultation (PRA CP14/24).
• Key SACR/SAOR changes flagged: Includes new due diligence-linked risk weightings, broader ECAI recognition, 0% risk weight for Jersey Government sterling exposures, lower risk weights for SMEs, BBB corporates and mortgage 'transactors', a foreign-currency exposure multiplier, and a single Business Indicator approach for operational risk capital.
• Large Exposures direction: JFSC intends to move toward the PRA's post-collateral exposure measurement and sovereign exemptions, while retaining concerns raised by industry about recognition of indirect exposures and group concession limits.
• Prudential reporting: JFSC intends to replace existing prudential reporting forms with new forms derived from PRA forms and guidance, and will require operational loss history data (aligned to PRA's 10-year, £20,000 threshold approach, with flexibility for data from 2024 onward).

No new Code obligations take effect from this paper itself; it confirms direction of travel ahead of near-final draft Codes, further consultations, and eventual implementation across H2 2026 to H2 2027.

Key obligations

• JIBs will need JFSC case-by-case approval to apply preferential risk weights to certain unrated corporate exposures once the new Codes take effect
• JIBs will be required to maintain and annually provide a record of operational losses exceeding £20,000 covering (where available) the previous 10 years, with data required from 2024 onwards, once Pillar 2/prudential reporting requirements are finalised
• JIBs must transition to new prudential Codes from 1 January 2027 at the earliest, with full implementation required by H2 2027 (Codes effective 1 July 2027)

Applies to

Jersey incorporated banks (JIBs)

Deadlines

• July 2025: JFSC to provide JIBs with near-final draft documentation on SACR and SAOR and consult on advanced approaches to credit risk, systemic importance, NSFR and Leverage Ratio
• end of October 2025: JFSC aims to finalise and publish list of relevant PRA guidance material
• H2 2025: JFSC to consult on remaining Code changes needed to implement Basel III, including Large Exposures
• H1 2026: JFSC to publish near-final Codes and consult on changes to Pillar 2 (including Interest Rate Risk in the Banking Book) and Prudential Reporting
• 1 January 2027: Earliest date JIBs may transition to new Codes under transitional provisions
• H2 2026: JFSC to implement changes to Pillar 2 and Prudential Reporting so JIBs can transition in H1 2027
• 1 July 2027: Effective date for near-final Codes implementing Basel III
• H2 2027: All Basel III aspects to be live for JIBs