WIREDGOV

The Council of the European Union recently reached a general approach on the so-called banking package, a comprehensive package of reforms that the Commission proposed to further strengthen the resilience of the EU banking sector.

This marks an important milestone and provides the Council Presidency with the mandate to start negotiations with the European Parliament. This package contributes significantly to further reducing risks in EU banks and it's an essential element for the completion of Banking Union. It builds on existing banking rules and aims to complete the post-crisis regulatory agenda, making sure that outstanding challenges to financial stability are addressed. At the same time it ensures that banks can continue to support the real economy. 

Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, recently said: "I am delighted that after more than one year and a half of very complex and technical discussions, the Council has reached a general approach on this very important risk-reducing package. Europe needs a strong and diverse banking sector to finance the economy. The agreement reached in Council today is an important step towards that goal. We now invite the European Parliament to define its negotiation position as soon as possible in view of a swift closure of the file. This lays the basis for further progress on completing Banking Union."

The November 2015 banking package is part of Commission's ongoing work to reduce risk in the banking sector, as set out in the Communication "Towards the Completion of the Banking Union". The measures are in line with the conclusions of the ECOFIN Council in June 2016, where the Commission was invited to put forward relevant proposals no later than the end of 2016. 

Background  

The measures will implement international standards into EU law, while taking into account European specificities and avoiding undue impact on the financing of the real economy. They also take into account the results of the Call for Evidence. The measures will amend the following pieces of legislation: 

• The Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD) which were adopted in 2013 and which set out prudential requirements for credit institutions (i.e. banks) and investment firms and rules on governance and supervision; 
• The Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR) which were adopted in 2014 and which spelled out the rules on the recovery and resolution of failing institutions and establish the Single Resolution Mechanism. 

The recent agreement complements previously-agreed risk-reduction measures, such as 

• the bank creditor hierarchy, which ensures a harmonised subordination – or ranking - for loss absorbing instruments;
• the Regulation on IFRS9 and large exposures which mitigates the impact of the introduction of IFRS9 on banks' capital. It also gives banks with large holdings of government bonds denominated in a domestic currency of another Member State time to adjust to new large exposures limits.

For More Information

IP MEMO AND FACTSHEET FROM NOV 2016

CRR/CRD IV

BRRD

SRMR

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• Letizia LUPINI (+32 2 295 19 58)

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