Banking Union: Council adopts measures to reduce risk in the banking system
The EU is putting in place a new framework which will strengthen the banking union and reduce risks in the financial system.
The Council yesterday adopted a comprehensive legislative package which will reduce risks in the banking sector and further reinforce banks' ability to withstand potential shocks.
The package contains amendments to the capital requirement legislation (regulation 575/2013 and directive 2013/36/EU) which reinforce the capital and liquidity positions of banks, and strengthens the framework for the recovery and resolution of banks in difficulty (directive 2014/59/EU and regulation 806/2014).
Eugen Teodorovici, Minister of finance of Romania, which currently holds the Council presidency yesterday said:
Today we have adopted a central piece of Europe's financial reform agenda. It is a stepping stone in the deepening of the Economic and Monetary Union. It also brings the EU in line with its international commitments. Thanks to the introduction of key measures such as the binding leverage ratio for all banks and the introduction of a "total loss-absorbing capacity" for the biggest institutions, banks will be better capitalised and better equipped to withstand market turbulences.
The proposals implement reforms agreed at international level following the 2007-2008 financial crisis to strengthen the banking sector and address remaining challenges to financial stability. Presented in November 2016, they include elements agreed by the Basel Committee on Banking Supervision and by the Financial Stability Board (FSB).
The package includes in particular the following key measures:
- a leverage ratio requirement for all institutions as well as a leverage ratio buffer for all global systemically important institutions;
- a net stable funding requirement;
- a new market risk framework for reporting purposes, including measures reducing reporting and disclosure requirements and simplifying market risk and liquidity rules for small non-complex banks in order to ensure a proportionate framework for all banks within the EU;
- a requirement for third-country institutions with significant activities in the EU to have an EU intermediate parent undertaking;
- a new total loss absorbing capacity (TLAC) requirement for global systemically important institutions;
- enhanced Minimum Requirement for own funds and Eligible Liabilities (MREL) subordination rules for global systemically important institutions (G-SIIs) and other large banks;
- a new moratorium power for the resolution authority.
The banking package also includes a number of targeted measures to cater for EU specificities, such as incentives for investments in public infrastructures and SMEs or a credit risk framework facilitating the disposal of non-performing loans.
Following the signature of the adopted legislation in the week of 20 May, the banking package will be published in the Official Journal in the course of June and will enter into force 20 days later. Most of the new rules will start applying in mid-2021.
- Capital requirements regulation
- Capital requirements directive
- Bank recovery and resolution directive
- Single resolution mechanism regulation
+32 2 281 24 63
+32 470 88 23 83
Latest News from
EC welcomes Council final adoption of new rules on single-use plastics to reduce marine plastic litter22/05/2019 16:37:00
The Council of the EU has adopted the ambitious measures proposed by the EC to tackle marine litter coming from the 10 single-use plastic products most often found on European beaches, as well as abandoned fishing gear and oxo-degradable plastics.
escEU: EU establishes initial firefighting fleet for next forest fire season22/05/2019 15:25:00
To prepare for the risk of forest fires during the upcoming summer, the EC has launched the first fleet of firefighting aircraft under the new rescEU system to tackle natural disasters.
European Border and Coast Guard: Launch of first ever joint operation outside the EU22/05/2019 13:43:00
The European Border & Coast Guard Agency, in cooperation with the Albanian authorities, is launching the first ever joint operation on the territory of a neighbouring non-EU country.
EU adopts new rules on fertilisers22/05/2019 12:25:00
The Council has adopted a regulation which harmonises the requirements for fertilisers produced from phosphate minerals and from organic or secondary raw materials in the EU, opening up new possibilities for their production and marketing on a large scale.
Aviation Strategy for Europe: EC signs landmark aviation agreements with China21/05/2019 13:25:00
The EU and China have signed an agreement on civil aviation safety and a horizontal aviation agreement to strengthen their aviation cooperation.
European Parliament candidates from the main Spanish parties propose reforming the EU institutions21/05/2019 11:43:00
On 10 May, candidates from the main parties running for the EP elections took part in a round table debate organised by the EESC in Madrid. They were in favour of initiating a reform of the EU institutions with the aim, amongst other things, of enabling organised civil society to play a greater role in the building of Europe.
EU Facility for Refugees in Turkey: solid progress in supporting refugees20/05/2019 15:25:00
The EC has reported good progress in the implementation & programming of €6bn of the EU Facility for Refugees in Turkey. More than 80 projects are currently up & running delivering tangible results to refugees and host communities in particular on education and health.
Code of Practice against disinformation20/05/2019 14:38:00
The EC has published the reports & analysis of the progress made in April 2019 by Facebook, Google and Twitter to fight disinformation.
Cyber-attacks: Council is now able to impose sanctions20/05/2019 12:25:00
On 17 May 2019, the Council established a framework which allows the EU to impose targeted restrictive measures to deter & respond to cyber-attacks which constitute an external threat to the EU or its member states.
Fight against antisemitism is also a fight for a democratic, value-based Europe20/05/2019 11:37:00
Antisemitism, which many had thought relegated to an inglorious past, has unfortunately returned to become more widespread in Europe than anyone ever predicted. France and Germany report an increase in offences against Jews of 74% and 60% respectively.