December 04, 2018

European Council endorsed the agreement achieved between the presidency and the Parliament on the key measures of a comprehensive legislative package aimed at reducing risks in the banking sector in EU. This is a significant step toward strengthening the Banking Union. The banking package comprises amendments to two regulations and two directives—namely amendments to the Capital Requirements Regulation and Directive (CRR/CRD), the Bank Recovery and Resolution Directive (BRRD), and the Single Resolution Mechanism Regulation (SRMR).

EC presented the banking package in November 2016 to implement the reforms agreed at the international level, following the 2007-08 financial crisis. The package includes prudential standards adopted by BCBS and by FSB. The agreed measures deliver on three of the key objectives set out by the European Council roadmap on completing the Banking Union agreed in June 2016:

  • Enhancing the framework for bank resolution, particularly the necessary level and quality of the subordination of liabilities (MREL) to ensure an effective and orderly bail-in process.
  • Introducing the possibility for resolution authorities to suspend a bank's payments and/or contractual obligations when it is under resolution, to help stabilize the bank's situation.
  • Strengthening bank capital requirements to reduce incentives for excessive risk taking, by including a binding leverage ratio, a binding net stable funding ratio, and setting risk-sensitive rules for trading in securities and derivatives.

In addition, the banking package contains measures to improve lending capacity of banks and to facilitate a greater role for banks in the capital markets. This involves reducing the administrative burden for smaller and less complex banks, linked in particular to reporting and disclosure requirements; enhancing the capacity of banks to lend to small and medium-size enterprises; and reducing the costs of issuing/holding certain instruments, such as high quality securitization instruments or covered bonds. The banking package also contains a framework for the cooperation and information-sharing among the various authorities involved in the supervision and resolution of cross-border banking groups.

Work on the remaining outstanding issues will continue at the technical and political levels, in view of finalizing negotiations on the banking package by the end of the year. European Parliament and Council will then be called on to adopt the proposed regulation at first reading.

 

Related Links

Keywords: Europe, EU, Banking, Banking Union, CRR 2, CRD 5, BRRD 2, SRMR 2, Proportionality, European Council

Related Articles
News

EBA Report Assesses Regulatory Framework for Fintech Activities

EBA published the findings of its analysis on the regulatory framework applicable to fintech firms when accessing the market.

July 18, 2019 WebPage Regulatory News
News

OSFI Revises Capital Requirements for Operational Risk for Banks

OSFI is revising its capital requirements for operational risk, in line with the final Basel III revisions published by BCBS in December 2017.

July 18, 2019 WebPage Regulatory News
News

OSFI Consults on Revised Principles for Management of Liquidity Risk

OSFI proposed revisions to Guideline B-6 on the principles for the management of liquidity risk.

July 18, 2019 WebPage Regulatory News
News

ESMA Guidance on Disclosures for Credit Rating Sustainability Issues

ESMA published the technical advice on sustainability considerations in the credit rating market, along with the final guidelines on disclosure requirements applicable to credit ratings.

July 18, 2019 WebPage Regulatory News
News

FASB Issues Q&A on Estimation of Expected Credit Losses by Firms

FASB issued a second question-and-answer (Q&A) document that addresses more than a dozen frequently asked questions related to the Accounting Standards Update No. 2016-13 titled “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”

July 17, 2019 WebPage Regulatory News
News

US Agencies Delay Enforcing Volcker Rule Restrictions on Foreign Funds

US Agencies (FDIC, FED, and OCC) announced that they will not take action related to restrictions under the Volcker Rule for certain foreign funds for an additional two years.

July 17, 2019 WebPage Regulatory News
News

SRB Announces SRF Receives Cash Injection, Grows to EUR 33 billion

SRB announced that the Single Resolution Fund (SRF or the Fund) received a cash injection of EUR 7.8 billion from 3,186 institutions in 2019, bringing the total amount in the Fund to about EUR 33 billion.

July 17, 2019 WebPage Regulatory News
News

FASB to Propose to Delay CECL Compliance Deadline for Certain Entities

FASB published a summary of the tentative decisions taken at its Board meeting in July 2019.

July 17, 2019 WebPage Regulatory News
News

IMF Publishes Report on 2019 Article IV Consultation with Vietnam

IMF published its staff report in context of the 2019 Article IV consultation with Vietnam.

July 16, 2019 WebPage Regulatory News
News

European Parliament Elects Next President of European Commission

European Parliament elected Ursula von der Leyen from Germany as the first female President of the next European Commission for a five-year term from November 01, 2019.

July 16, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3476