21 June 2018

European Parliament: draft RTS on economic downturn in IRB modelling, Level 2 in CRD V/CRR II proposals, and CRD IV/CRR update 2018

It continues the ECON discussions on 28 February 2017 and 26 March 2018 and covers in particular the EBA’s draft RTS on estimation and identification of an economic downturn in IRB modelling and provides an overview to DAs and RTS as proposed by the Commission in their CRD V and CRR II proposals.

The CRD IV and CRR constitute the core of European banking legislation.

They contain many empowerments for the Commission to adopt ‘Level 2’ measures, i.e. Delegated Acts (DAs) and Implementing Acts (IAs), including specific types thereof, namely Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS), which are both based on drafts by the European Banking Authority (EBA).

To date, some of these measures are still outstanding.

In view of the prerogative of the European Parliament to object to DAs/RTS, this briefing provides an updated overview table on the state of play, focusses on one draft EBA RTS on estimation and identification of an economic downturn in IRB modelling which is currently under consultation (for the second time) because particular attention is paid to the methods on how banks’ capital (requirements) are measured.

Thus they are crucial for the application of the CRR/CRD IV and for the industry in view of their substantive impact on capital needed.

Finally, there is a brief outlook on Level 2 measures proposed by the Commission in CRD V and CRR II.

Full briefing

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