European Council agreed on a package of measures aimed to reduce risk in the banking industry. The package comprises Capital Requirements Regulation and Directive (regulation 575/2013 or CRR 2, and directive 2013/36 or CRD 5), Bank Recovery and Resolution Directive (directive 2014/59/EU or BRRD 2), and Single Resolution Mechanism Regulation (806/2014 or SRMR 2).
The proposals are intended to implement reforms agreed at the international level following the 2007–08 financial crisis. The reforms include elements agreed by BCBS and FSB. The proposals on bank capital requirements include a binding net stable funding ratio and a binding leverage ratio to prevent banks from excessively increasing leverage. The proposals on bank recovery and resolution implement the November 2015 standard of FSB on total loss-absorbing capacity (TLAC). They integrate the TLAC requirement into the minimum requirement for own funds and eligible liabilities (MREL) rules of EU. The TLAC standard sets out requirements for G-SIIs only while MREL covers the entire EU banking industry; the proposals address this and other differences between the two. While speaking at the ECOFIN Conference, the EC Vice President Valdis Dombrovskis highlighted that "this package also includes the principle of proportionality, with certain alleviations for smaller banks to reduce their reporting requirements and the related administrative burden." This important milestone "provides the Council Presidency with the mandate to start negotiations with the European Parliament."
This package contributes significantly to further reducing risks in EU banks and it is an essential element for the completion of Banking Union. It builds on existing banking rules and aims to complete the post-crisis regulatory agenda, making sure that outstanding challenges to financial stability are addressed. The European Council is due to review the progress achieved so far in reducing risk in the EU banking industry in June 2018 and could decide on further specific steps to be taken.
Keywords: Europe, EU, Banking, CRR 2, CRD 5, BRRD 2, SRMR 2, Proportionality, EC, European Council
Previous ArticleFDIC Seeks Comments on Renewal of Certain Information Collections
MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.
PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.
EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.
BCBS and FSB published a report on supervisory issues associated with benchmark transition.
IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.
ESMA updated the reporting manual on the European Single Electronic Format (ESEF).