At the end of May, ESBG reiterated its recommendations for the trialogues on the Banking Package (CRR/CRD) towards the co-legislators, including Members States, the Council Presidency, the Parliament’s Rapporteur and Shadow Rapporteurs as well as the Commission. These recommendations were developed within the ESBG Task Force on Basel IV and first shared earlier in March 2023 at the beginning of the negotiations.
Ahead of the last two political trialogues scheduled on 6 and 15 June, the positions of the Council and of the Parliament differ both in principle and in substance on several issues, including the level of application of the output floor, Fit & Proper, third country branches, provisions related to operational risk, NPLs and ESG. In some areas a compromise can be found while in other ones an accommodation will be difficult as the issues are more of a binary nature.
For what concerns the output floor, it should applied as outlined in the Basel text, i.e. at the highest level of consolidation, hence the Commission’s proposal would be the preferred solution. As an alternative, the Council’s approach for a consolidated application at Member State level is to be supported. The EP wording is less welcome since it is particularly unclear because it does not clarify whether it targets cross-border groups, it suggests that supervisor could also adjust the Pillar 2 at its own discretion, and it extends the topic to the review of existing liquidity waiver.
On Fit & Proper, the proposed suitability assessment must consider national differences in the design of company law and corporate governance in the European banking landscape. In this respect, we strongly support the Council position proposing to delete Articles 91a and 91b CRD. The particularly important exception for institutions that have no influence on the selection of members (Article 91 (13a) CRD) in the proposal of the EP should be kept. It’s important that the timing of the internal suitability assessment is not specified. Moreover, the assessment of key function holders by the authority should be deleted as these are not members of the management body but employees.
ESBG will continue to closely monitor and influence the trialogues in the final phase on the basis of its recommendations and through bilateral talks with the co-legislators. A political agreement may be expected by end-June 2023 but depending on the outcome of the next political trialogue.
Your Contact:
Roberto Timpano-Principal Advisor-Prudential Policy and Supervision
e.: roberto.timpano@wsbi-esbg.org
t. : +32 2 211 11 66
