The proposals for a Regulation and Directive set out to amend and replace existing capital requirement Directives 2006/48/EC and 2006/49/EC.
They are aimed at translating into EU law an international agreement approved by the G20 in November 2010. The so-called Basel III agreement, concluded by the Basel Committee on Banking Supervision, strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.
In addition to implementing the Basel III agreement, the CRD IV proposals strengthen governance and supervision requirements, provide for supervisors to apply sanctions if EU rules are breached, and seek to reduce reliance by credit institutions on external credit ratings. They also create a single set of harmonised prudential rules that would apply to banks throughout the EU and are aimed at ensuring uniform application of Basel III in all Member States.
The Commission's proposals divide the current Capital Requirements Directive into two legislative instruments: a Directive governing access to deposit-taking activities and a Regulation which establishes the prudential requirements institutions need to respect.
The draft Rregulation, which would be directly applicable to prevent national divergences in implementation, sets capital and liquidity requirements, proposes a leverage ratio subject to supervisory review, and introduces changes to encourage banks to clear over-the-counter derivatives through central counterparties.
Full Council conclusions
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