27/03/2013 - Economic and Financial Affairs Council (ECOFIN)
Political agreement on new bank capital requirements confirmed
On 27 March 2013 the Permanent Representatives Committee approved a political agreement on a compromise text on stricter capital requirements for banks (the "CRD 4 package"). The European Parliament's agreement is still needed before final adoption of the texts.
© Jacek Michiej – Fotolia.com
The purpose of the new rules
The CRD 4 package will enshrine in EU law a comprehensive set of international standards known as the Basel III agreement.
These new European rules are also designed to:
- increase financial stability, by making the banking sector more resilient in the face of financial shocks
- contribute to sustainable economic growth, by introducing harmonised rules required by the single market and at the same time ensuring that credit continues to flow to the real economy.
The measures introduced cover, inter alia:
- a higher proportion of top-quality (common equity tier 1, CET 1) capital to cover unexpected losses
- additional capital requirements in the form of buffers
- provisions on liquidity and leverage
- the possibility for member states to tighten prudential requirements
- capping of bankers' bonuses
- strengthened governance and transparency.
The new legislation will apply to all European banks.
Following this agreement by the Permanent Representatives Committee – an ambassador-level body that prepares Council decisions – the draft regulation and draft directive will be sent to the European Parliament. If the Parliament approves the texts as agreed, the Council will also approve them without further discussion.
The new rules will apply from 1 January 2014 if publication in the Official Journal takes place by 30 June 2013.