Basel III Prudential Roadmap: Advanced approaches, systemic importance, the Net Stable Funding Ratio and the leverage ratio (CP No. 5 2025)

Summary

This is a JFSC consultation paper (CP No. 5 2025) seeking industry feedback on the next phase of Jersey's Basel III implementation. It covers advanced approaches to credit risk and the output floor, the identification of systemically important banks and a related systemic buffer, the Net Stable Funding Ratio (NSFR), and the leverage ratio, and it sets out a revised implementation timeline (the Roadmap).

• Advanced approaches / output floor: Proposes transposing PRA near-final Basel 3.1 rules (PS9/24) into the Banking Code, requiring JFSC permission to use AIRB/FIRB models and introducing an output floor with a carve-out for international subsidiaries already subject to a group-level floor.
• Systemic importance: Proposes a simple model to identify highly systemic banks based on provision of banking services to Jersey retail customers (including a proposed threshold of 9,000 transactional accounts) and related systemic buffer measures; this may also affect Jersey branches, not just Jersey Incorporated Banks (JIBs).
• Leverage ratio: Proposes introducing a UK-aligned (PRA) leverage ratio for systemic and internationally active banks.
• NSFR: Proposes a UK-aligned NSFR approach, with a carve-out for smaller, non-systemic banks with no material overseas operations, and asks whether Jersey should align with or fully adopt UK rules.
• Revised roadmap: Delays the transitional window by six months to align with the UK's 1 January 2027 implementation date, while keeping the final go-live date of 1 July 2027; defers further consultation on Trading Book, Large Exposures, securitisations and own funds to Q4 2025, and defers Pillar 2/Prudential Reporting work to H1 2026.

The paper is purely a consultation (draft status) with 12 questions for industry comment; it does not itself impose binding rules, but signals future Banking Code changes and firm compliance dates for Jersey Incorporated Banks (JIBs).

Key obligations

• Submit written comments on the consultation proposals to the JFSC (or via Jersey Finance Limited for a coordinated industry response) no later than 30 September 2025
• Once implemented, all Jersey Incorporated Banks (JIBs) must comply with the full new Basel III regime (advanced approaches, output floor, systemic buffer, leverage ratio and NSFR requirements) from H2 2027, with an option to transition earlier from 1 January 2027
• Banks wishing to use advanced approaches (AIRB/FIRB) will need JFSC permission both for use of the approach generally and for each specific model used

Applies to

Jersey Incorporated Banks (JIBs), Jersey branches of banks (for systemic importance proposals)

Deadlines

• 30 September 2025: Deadline for submitting consultation responses to the JFSC or to Jersey Finance Limited for the coordinated industry response
• Q4 2025: JFSC to publish feedback and near-final draft documentation, and to consult on remaining Codes changes (Large Exposures, Trading Book, market risk, counterparty credit risk, securitisations, own funds)
• H1 2026: JFSC to publish near-final Codes and to consult on changes to Pillar 2 and Prudential Reporting
• H2 2026: JFSC to implement changes to Pillar 2 and Prudential Reporting so JIBs can transition in H1 2027
• 1 January 2027: Earliest date from which JIBs may transition under the transitional provisions
• 1 July 2027: Final go-live implementation date for the new Codes
• H2 2027: Deadline by which all JIBs must comply with the full new Basel III regime