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​​​​​​​​​​​​​​Capital Requirements

It is of crucial importance that the EU framework takes into account the specificities of credit institutions to a gre​​ater extent while implementing Basel III, allowing for a certain degree of differentiation. Savings and retail institutions should be subject to adjusted requirements in accordance with their business model in order to safeguard their financing capacity.


Updated: January 2017​​


ESBG position on capital requirements

In light of the new legislation, ESBG has advocated that the original one-size-fits-all approach was not appropriate, as this may cause difficulties for savings and retail financial institutions in Europe, in particular to account for specific characteristics of savings banks. Indeed, the introduction of stricter prudential requirements will inevitably have repercussions on the capacity for institutions to finance the real economy, and in particular on SMEs which play a crucial role in the development of sustainable growth and job creation in the EU. As SMEs depend on loans for the majority of their financing, they would suffer significantly from a rise in the cost of credit, which would result in slowing their investments and efficiency.

This is why, in order to preserve the diversity of the European banking landscape, it is indispensable to keep ensuring that institutions' specificities are taken into account within the implementation of the CRD V ​package and its future developments through a proportionate application of its provisions according to institution size and complexity and the riskiness of their activities. This has been achieved, in particular through the acknowledgement of particular instruments as Core Equity Tier 1, the recognition of specific structures for deductions, and a decrease (still provisional) in the risk weights associated with SMEs.

Even though realism has prevailed and most of our concerns have been taken on board, much remains to be worked out in the near future both at international and European levels, in particular with regards to the calibration of the leverage ratio and the review of risk weights.


Background on capital requirements

Following the international Basel III Accord, the European Commission adopted on 20 July 2011 a legislative package to strengthen regulation of the banking sector by enhancing capital requirements and introducing liquidity provisions. The proposal aimed to replace the Capital Requirements Directives with a directive and a regulation. The Directive (CRD IV) governs access to deposit-taking activities while the Regulation (CRR) establishes prudential requirements. The CRD IV package entered into force on 17 July 2013, and its implementation started on 1 January 2014. Meanwhile, EU decision-makers and stakeholders discuss the CRD V and CRR II, which were proposed by the Commission in November 2016.

In the international arena, the Basel III rules have been elaborated by the Basel Committee with the intent to apply them to big, internationally active financial institutions. However, the CRR/CRD IV, which implements these rules in the EU legislative framework, is applied by all 8,200 banks in Europe, irrespective of their size, complexity or business models.

 Related Documents

 

 

WSBI-ESBG response to Commission consultation on possible impact of CRR, CRD IVhttps://www.wsbi-esbg.org/SiteCollectionDocuments/COM - CRDIV-Bank lending - ESBG response - FV.pdfWSBI-ESBG response to Commission consultation on possible impact of CRR, CRD IV2015-10-07T22:00:00Z
Letter to BCBS on review of the Standardised Approachhttps://www.wsbi-esbg.org/SiteCollectionDocuments/15-015 Joint letter on review of the standardised approach for credit ri.pdfLetter to BCBS on review of the Standardised Approach2015-03-30T22:00:00Z
WSBI-ESBG Response to the BCBS Consultation on Capital Floorshttps://www.wsbi-esbg.org/SiteCollectionDocuments/BCBS - Capital floors - WSBI-ESBG response - FV.pdfWSBI-ESBG Response to the BCBS Consultation on Capital Floors2015-03-29T22:00:00Z
ESBG response to the EBA Consultation on criteria for determining the minimum requirements for own funds and eligible liabilitieshttps://www.wsbi-esbg.org/SiteCollectionDocuments/EBA consultation on MREL - ESBG paper - FV.pdfESBG response to the EBA Consultation on criteria for determining the minimum requirements for own funds and eligible liabilities2015-02-27T23:00:00Z
ESBG Response to the EBA Consultation on materiality threshold of credit obligation past duehttps://www.wsbi-esbg.org/SiteCollectionDocuments/Credit obligation past due - ESBG position paper - RTS- FV.pdfESBG Response to the EBA Consultation on materiality threshold of credit obligation past due2015-01-29T23:00:00Z
ESBG Response to EBA CP/2014/44: Amending ITS on reportinghttps://www.wsbi-esbg.org/SiteCollectionDocuments/0059.pdfESBG Response to EBA CP/2014/44: Amending ITS on reporting2015-01-25T23:00:00Z
ESBG response to EBA DP on simple standard and transparent securitisations https://www.wsbi-esbg.org/SiteCollectionDocuments/ESBG response to EBA DP on simple standard and transparent securitisations.pdfESBG response to EBA DP on simple standard and transparent securitisations 2015-01-14T23:00:00Z
WSBI-ESBG Response to the BCBS Consultation on the Review of Pillar 3 disclosure requirements"https://www.wsbi-esbg.org/SiteCollectionDocuments/0874b.pdfWSBI-ESBG Response to the BCBS Consultation on the Review of Pillar 3 disclosure requirements"
ESBG Position on Interest Rate Risk in the Banking Bookhttps://www.wsbi-esbg.org/SiteCollectionDocuments/242.pdfESBG Position on Interest Rate Risk in the Banking Book2014-09-24T22:00:00Z
Response to the EBA Consultation on draft RTS on the permanent and temporary uses of the IRB approachhttps://www.wsbi-esbg.org/SiteCollectionDocuments/0815.pdfResponse to the EBA Consultation on draft RTS on the permanent and temporary uses of the IRB approach2014-09-16T22:00:00Z
ESBG Common Response to the EBA Consultation on Draft Guidelines on Materiality, Proprietary and Confidentiality, and on Disclosure Frequencyhttps://www.wsbi-esbg.org/SiteCollectionDocuments/0767 EBA Disclosure final.pdfESBG Common Response to the EBA Consultation on Draft Guidelines on Materiality, Proprietary and Confidentiality, and on Disclosure Frequency2014-09-14T22:00:00Z
Response to the EBA consultation on draft RTS and draft ITS on benchmarking portfolios https://www.wsbi-esbg.org/SiteCollectionDocuments/0682.pdfResponse to the EBA consultation on draft RTS and draft ITS on benchmarking portfolios 2014-07-23T22:00:00Z
EBA Banking Stakeholder Group - Working Group on Proportionality 2https://www.wsbi-esbg.org/SiteCollectionDocuments/Proportionality_V4.pdfEBA Banking Stakeholder Group - Working Group on Proportionality 22014-04-30T22:00:00Z
EBA Banking Stakeholder Group - Working Group on Proportionalityhttps://www.wsbi-esbg.org/SiteCollectionDocuments/Proportionality_V3 (2).pdfEBA Banking Stakeholder Group - Working Group on Proportionality2014-03-31T22:00:00Z
The ESBG’s response to the EBA’s consultation on draft RTS on own funds (Part IV) (EBA/CP/2013/43)https://www.wsbi-esbg.org/SiteCollectionDocuments/0063 EBA consultation Own funds IV.pdfThe ESBG’s response to the EBA’s consultation on draft RTS on own funds (Part IV) (EBA/CP/2013/43)2014-01-23T23:00:00Z
ESBG response to the EBA on Draft Regulatory Technical Standards on Own Funds under the draft CRRhttps://www.wsbi-esbg.org/SiteCollectionDocuments/0660_ESBG_EBACP201317.pdfESBG response to the EBA on Draft Regulatory Technical Standards on Own Funds under the draft CRR2013-07-30T22:00:00Z
ESBG Position paper on the EBA consutations on draft implementing technical standards (CP50 and CP51)https://www.wsbi-esbg.org/SiteCollectionDocuments/0303 - ESBG final position paper on the EBA consultations Implementing Technical Standards CP50 and CP51.pdfESBG Position paper on the EBA consutations on draft implementing technical standards (CP50 and CP51)2012-03-18T23:00:00Z
Follow-up to the EBA Workshop on proportionality held on 22 October 2013https://www.wsbi-esbg.org/SiteCollectionDocuments/1148_FV.PDFFollow-up to the EBA Workshop on proportionality held on 22 October 20132014-01-14T23:00:00Z
The ESBG's position on the Review of the European System of Financial Supervisionhttps://www.wsbi-esbg.org/SiteCollectionDocuments/1155 v.1.2 ESBG position on ESFS Review_clean.pdfThe ESBG's position on the Review of the European System of Financial Supervision2013-12-12T23:00:00Z
ESBG welcomes the formal adoption by the European Parliament of the CRD4 packagehttps://www.wsbi-esbg.org/SiteCollectionDocuments/2013 04 18 CRD CRR Adoption def.pdfESBG welcomes the formal adoption by the European Parliament of the CRD4 package2013-04-17T22:00:00Z
ESBG Response to EBA Consultation on Own Funds Part 2https://www.wsbi-esbg.org/SiteCollectionDocuments/1334 EBA RTS Consultation Savings Banks Art. 25 CRR - Copy.pdfESBG Response to EBA Consultation on Own Funds Part 22013-12-20T23:00:00Z
ESBG Response to the EBA Consultation Paper "Draft RTS on Own Funds - Part Two"https://www.wsbi-esbg.org/SiteCollectionDocuments/1334 EBA RTS Consultation Savings Banks Art. 25 CRR.pdfESBG Response to the EBA Consultation Paper "Draft RTS on Own Funds - Part Two"2012-12-20T23:00:00Z
ESBG Response to the EBA Consultation Paper on Draft RTS on Own Funds - part onehttps://www.wsbi-esbg.org/SiteCollectionDocuments/0704 EBA RTS on own funds_ESBG response.pdfESBG Response to the EBA Consultation Paper on Draft RTS on Own Funds - part one2012-05-31T22:00:00Z
ESBG Response to EBA Draft Regulatory Technical Standards on Own Fundshttps://www.wsbi-esbg.org/SiteCollectionDocuments/ESBG Response to EBA Draft Regulatory Technical Standards on Own Funds.pdfESBG Response to EBA Draft Regulatory Technical Standards on Own Funds2012-05-31T22:00:00Z
ESBG Priority Paper on the CRD Reviewhttps://www.wsbi-esbg.org/SiteCollectionDocuments/1347 ESBG Priority Paper on the CRD Review.pdfESBG Priority Paper on the CRD Review2011-12-05T23:00:00Z
ESBG comments on Basel Committee and EC proposals for new rules for the banking sector ("Basel III" and "CRD 4")https://www.wsbi-esbg.org/SiteCollectionDocuments/2010 04 27 Basel III and CRD 4.pdfESBG comments on Basel Committee and EC proposals for new rules for the banking sector ("Basel III" and "CRD 4")2010-04-26T22:00:00Z
ESBG Response to Commission working document on CRD4https://www.wsbi-esbg.org/SiteCollectionDocuments/0426 - ESBG Response to CRD 4 - final - 22 April.pdfESBG Response to Commission working document on CRD42010-04-19T22:00:00Z

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