European Council Adopts Package on CRD 5, CRR 2, BRRD 2, and SRMR 2
European Council adopted a comprehensive legislative package that will reduce risks in the banking sector and further reinforce banks' ability to withstand potential shocks. The 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). Following the signature of the adopted legislation in the week of May 20, the banking package will be published in the Official Journal of the European Union in the course of June and will enter into force 20 days later. Most of the new rules will start applying in mid-2021.
The proposals implement reforms agreed at the international level following the 2007-2008 financial crisis to strengthen the banking sector and address remaining challenges to financial stability. Presented in November 2016, the package include elements agreed by BCBS and FSB. The package includes the following key measures:
- Leverage ratio requirement for all institutions as well as a leverage ratio buffer for all global systemically important institutions
- A net stable funding requirement
- New market risk framework for reporting purposes, including measures reducing reporting and disclosure requirements and simplifying market risk and liquidity rules for small non-complex banks
- Requirement for third-country institutions with significant activities in EU to have an EU intermediate parent undertaking
- New total loss-absorbing capacity (TLAC) requirement for global systemically important institutions
- Enhanced Minimum Requirement for own funds and Eligible Liabilities (MREL) subordination rules for global systemically important institutions and other large banks
- New moratorium power for the resolution authority
- A number of targeted measures to cater for EU specificities, such as incentives for investments in public infrastructures and small and medium-size enterprises (SMEs) or a credit risk framework facilitating the disposal of non-performing loans
Related Links
Effective Date: OJ+20 Days
Keywords: Europe, EU, Banking, Banking Union, CRR 2, CRD 5, BRRD 2, SRMR 2, Basel III, European Council
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FSB Publishes the Global Shadow Banking Monitoring Report for 2017Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.