Banking Package 2021
On 27 October 2021, the European Commission adopted a review of EU banking rules. According to the European Commission, this package completes the implementation of the Basel III reforms to ensure banks remain resilient and capable of withstanding future shocks, protecting financial stability and citizen’s savings.
The new banking package includes:
- New rules on internal models – A new limit will be introduced to ensure risks are not underestimated when banks use their own calculation models to calculate their capital requirements.
- Stronger supervision – Supervisors will have stronger tools to oversee EU banks, including complex banking groups. Minimum standards will be introduced to supervise third-country branches of banks in the EU.
- Sustainability – Banks will be required to take Environmental, Social and Governance (ESG) risks into account when managing their business, thus contributing to the green transition.
The review consists of the following legislative elements:
- a legislative proposal to amend the Capital Requirements Directive (Directive 2013/36/EU);
- a legislative proposal to amend the Capital Requirements Regulation (Regulation 2013/575/EU);
- a separate legislative proposal to amend the Capital Requirements Regulation in the area of resolution (the so-called “daisy chain” proposal).
The legislative package will now be discussed by the European Parliament and Council.
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[Photo by: 30daysreplay Germany, available at unsplash.com]