“The banking package represents further steps towards a more robust and resilient EU banking system. This agreement has required a lot of negotiation, and Monday’s agreement means we can ensure that the Basel III standards will be in place on time. This is important progress towards safeguarding financial stability and in turn the stability of the economy as a whole,” says Minister for Financial Markets Niklas Wykman, who was in Brussels on Monday evening to lead the final negotiations.

One of the main issues in the negotiations was the ‘output floor’ for banks that calculate capital requirements using internal models, and how the ‘output floor’ should be applied. Under this agreement, the ‘output floor’ must be calculated at the level of each individual institution, which means local subsidiary banks as well. The agreement also strengthens the regulatory framework to better reflect risks in banking operations and introduces targeted and proportionate amendments to the framework for management assessments, i.e. the suitability assessments of board members and management bodies conducted by supervisory authorities. Furthermore, the agreement harmonises the supervision of branches of third-country banks.