European Parliament adopts position on the banking package to implement Basel III standards
Progress is being made on the upcoming implementation of the remaining Basel III banking standards in the EU with the European Parliament agreeing on January 24 its position on the legislative package containing the Capital Requirements Regulation (CRR) III and Directive (CRD) VI. This legislation is designed to implement the Basel III standards while seeking to bolster the competitiveness of Europe’s banking system. The rules contain provisions relating to the resilience and risk management of banks operating in the EU. Among other things, this legislation will implement the minimum capital requirements that banks must hold against market risk exposures, known as the Fundamental Review of the Trading Book (FRTB).
The rules are set to apply in the EU from January 2025 which aligns with the UK’s proposed go-live date, as confirmed in the proposals published in November 2022. US regulators are still working to further revise the US capital framework to implement and align with this final set of Basel III standards, with a set of proposed rules expected in the near future.
Additionally, Members of the European Parliament (MEPs) have proposed measures to strengthen reporting and disclosure requirements for ESG risk and have tasked the European Banking Authority (EBA) with assessing the merits of a dedicated prudential treatment of such exposures. In relation to cryptoassets, the Parliament is also seeking to require banks to disclose their direct and indirect exposure to cryptoassets and is looking to introduce tough capital requirements for banks with such exposures.
With the Parliament having now reached its negotiating position – and the EU member states already having reached theirs in November last year – negotiations between the EU institutions can now begin. The rules are expected to be finalised later this year with most of the changes applying from early 2025.
Bloomberg
Source link