Have your say consultation: EACB comments on the European Commission banking package “Aligning EU rules on capital requirements to international standards” Proposal for a regulation – COM(2021)664 2021/0342 (COD)
The fundamental problem of the implementation of the latest set of Basel standards resides in choices made at Basel level which make an adequate EU implementation challenging. The EACB acknowledges the Commission’s efforts to reduce the expected impact of reforms on the EU banking and credit markets and economy, while remaining compliant with the spirit of the global agreement, but further efforts are necessary.
As the first major jurisdiction to unveil implementation plans, a 2025 start date and a sufficiently phase-in are absolutely necessary given the massive efforts expected from EU banks and the uncertainty around plans elsewhere.
Banks will calculate and disclose “fully loaded” CRR3 ratios before the end of phase-in, becoming bound to fully loaded requirements ahead of time. A sign of capital shortfall at the end of transitionals would negatively impact investor confidence early on, affecting banks’ ability and need to raise capital (or bail-in debt) and restricting lending capacity.