Banking Union: Council adopts measures to reduce risk in the banking system

15 May 2019 11:57 AM

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:

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.

Next steps

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.

Visit the meeting page

Press contacts

Maria Tomasik

Press officer

+32 2 281 24 63
+32 470 88 23 83