EU banks lose relief on model test after FRTB delay

Deferment of new trading book regime to January 2025 eats into transition period for “erratic” P&L attribution test

A delay to trading book capital rules in Europe is adding to uncertainty over a crucial test that determines whether banks are allowed to use their own models under the new regime.

Lawmakers had originally slated a one-year transition period before the test fully applied. But the delay to the rules means that banks are now likely to lose the transition period, casting doubt on their ability to pass the test, experts say.

“If no-one takes the courage of removing [the test] or moving it to a non