Regulation 575/2013 (CRR) on prudential requirements for credit institutions and investment firms and amending Regulation (EU) 648/2012 (CRR); Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.
CRD IV-CRR adapts the international banking reform better known as the Basel III rules.
To set stricter capital requirements for banks (equity) and establish liquidity requirements. To impose more stringent criteria for the financial instruments qualifying as core tier one capital. To facilitate lending to small and medium-sized enterprises (SMEs). To limit bankers' bonuses and impose transparency requirements on banks (eg profit reporting). PROCESS COMPLETED
The reform came into application on 1 January 2014.
Deposit guarantee schemes
Revision of Directive 94/19/EC on deposit guarantee schemes (directive).
The directive in force protects bank deposits of up to 100,000 To further align rules on deposit guarantee schemes. A provision provides for faster repayment of deposits when a bank is in difficulty. To regulate more closely the financing of national deposit guarantee schemes by requiring ex ante financing by banks of these schemes.
PROCESS COMPLETED
The Council and EP reached a political compromise in December 2013. The Council confirmed it in first reading in March; the EP validated it on second reading on 15 April. Bank resolution
Directive establishing a framework for the recovery and resolution of credit institutions and To prevent future rescues of failing banks out of public funds. This will entail: Setting up a European framework for the orderly restructuring of distressed or failing banks based on three pillars: crisis prevention; PROCESS COMPLETED
The Council and EP worked out a political compromise in December 2013.
The EP validated it on 15 April investment firms and amending several directives.
early intervention by national resolution authorities; bank resolution based on different tools. Requiring each state to set up a resolution fund financed by banks (ex ante financing).
and the Council confirmed it on 6 May.
The rules are set to apply from 1 January 2016.
Bank supervision mechanism
Creation of a single supervisory mechanism (SSM) for eurozone banks. The SSM is open to banks outside the eurozone.
Regulation 1024/2013/EU gives the ECB supervisory powers; Regulation 1022/2013/EU amends the regulation establishing the European Banking Authority (EBA).
To supervise at European level banks established in the 18 and in other member states that wish to participate. The European Central Bank (ECB), which now includes a board of supervisors, plays the central supervisory role and cooperates closely with national authorities.
PROCESS COMPLETED
Formal adoption in November 2013.
The ECB will fully exercise its functions from November 2014.
Bank resolution mechanism
Creation of a single resolution mechanism (SRM) for eurozone banks. The SRM is open to states not in the eurozone.
Regulation establishing a single authority charged with restructuring failing banks; intergovernmental agreement on the functioning on a single resolution fund capitalised in advance by banks in order to support restructuring plans.
Creation of a single authority in charge of restructuring large, often transnational, banks. This authority includes a resolution board (a European agency made up primarily of national authorities and permanent members) that will draw up resolution plans to be validated in many cases by the European Commission. In other cases, the EU Council may validate plans. FORMAL ADOPTION PENDING
The Council and EP worked out a political compromise in December 2013. The EP validated it on 15 April; the Council still has to adopt it. Besides, 26 member states signed the intergovernmental agreement on a single resolution fund on 21 May.
The single resolution mechanism is expected to enter into force on 1 January 2015 and the bail-in and resolution functions would apply from 1 January 2016.
Restructuring of banking activities
Regulation on structural The legislation potentially targets around 30 banks considered too large, too complex and too interconnected to be allowed to go IN PROGRESS
Commissioner Michel Barnier (Internal Market) has said that the measures improving the resilience of EU credit institutions insolvent ('too big to fail'). To empower bank supervisors to require certain institutions to transfer part of their activities to a separate entity, in accordance with a long procedure. To ban purely speculative proprietary trading. Commission will propose legislation before the end of summer. Insurance Financial conglomerates (combining banks, investment and insurance firms)
Directive 2011/89/EU amending Directives 98/78/EC, 2002/87/EC and 2006/48/EC as regards supplementary supervision of financial entities in a financial conglomerate (directive).
Tighter supervision of financial conglomerates and stricter transparency rules.
PROCESS COMPLETED
Adopted formally in November 2011. Prudential requirements for insurance firms Solvency II
Directive 2009/138/EC on the taking-up and pursuit of insurance and reinsurance activities (Solvency II).
To establish stricter solvency requirements for insurers (including capital requirements). Insurance companies own funds must be calculated in terms of risks associated with assets. In other words, assets and liabilities are valued at market value rather than book value.
PROCESSUS COMPLETED
Adopted formally in November 2009.
The text will apply from 1 January 2016.
New financial supervision architecture/adaptation Omnibus II
Directive amending Directives 2003/71/EC and 2009/138/EC in respect of the powers of the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority, known as the
To adapt the Solvency II directive (above) to the new insurance supervision architecture. To apply specific measures to insurance products bearing a long-term guarantee to keep from penalising insurance companies' long-term investments.
PROCESS COMPLETED
The Council confirmed on 14 April the political compromise reached with the European Parliament, which had already validated it in March.
The text will apply from 1 January 2016.
Omnibus II directive.
Occupational retirement
Revision of Directive 2003/41/EC on institutions for occupational retirement provision (IORP II). To stimulate the role of these institutional investors in financing European growth.
IN PROGRESS
First reading
The EP has to adopt its position and the Council its general approach. The two institutions will then have to reach a political compromise.