EU published the final Capital Requirements Regulation II or CRR II (EU Regulation 2019/876) in the Official Journal of the European Union. Regulation 2019/876 of the European Parliament and of the Council amends Capital Requirements Regulation or CRR (Regulation No 575/2013). The amendments in the regulation cover the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and the European Market Infrastructure Regulation (EMIR/EU Regulation No 648/2012). CRR II shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Regulation 2019/876 shall largely apply from June 28, 2021 with certain exceptions.
The provisions of CRR II are in line with the internationally agreed standards and ensure the continued equivalence of Capital Requirements Directive (CRD IV) and CRR with Basel III framework. The existing risk-reduction measures and, in particular, reporting and disclosure requirements have also been improved to ensure that they can be applied in a more proportionate way and that they do not create an excessive compliance burden, especially for smaller and less complex institutions. Article 1 on the scope of the regulation states that Regulation 2019/876 lays down uniform rules concerning general prudential requirements that institutions, financial holding companies, and mixed financial holding companies supervised under CRD IV shall comply with in relation to the following items:
(a) Own funds requirements relating to entirely quantifiable, uniform and standardized elements of credit risk, market risk, operational risk, settlement risk and leverage
(b) Requirements limiting large exposures
(c) Liquidity requirements relating to entirely quantifiable, uniform, and standardized elements of liquidity risk
(d) Reporting requirements related to points (a), (b) and (c)
(e) Public disclosure requirements
CRR II lays down uniform rules concerning the own funds and eligible liabilities requirements that resolution entities that are global systemically important institutions (G-SIIs) or part of G-SIIs and material subsidiaries of non-EU G-SIIs shall comply with. CRR II does not govern publication requirements for competent authorities in the field of prudential regulation and supervision of institutions, as set out in CRD IV.
Effective Date: June 27, 2019
Keywords: Europe, EU, Banking, CRR 2, Credit Risk, Market Risk, Basel III, NSFR, LCR, TLAC, CRD IV, CRR, Reporting, European Council, European Parliament
Previous ArticlePRA Publishes Supervisory Disclosures for Banking Sector
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
The European Securities and Markets Authority (ESMA) has responded to the IFRS consultation on targeted amendments to the IFRS Foundation constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS Sustainability Standards.