On 14 May 2019, the European Council announced that it had adopted the European Commission’s banking package reforms (relating to the revised Capital Requirements Regulation / Directive, and the revised Bank Recovery and Resolution Directive, and Single Resolution Mechanism Directive). Our extended blog on these reforms can be found here.

The proposals implement reforms agreed at international level following the financial crisis to strengthen the banking sector and address remaining challenges to financial stability. The press release notes key measures introduced by the reforms, including:

  • a leverage ratio requirement for all institutions as well as a leverage ratio buffer for all global systemically important institutions;
  • a new market risk framework for reporting purposes, including measures reducing reporting and disclosure requirements and simplifying market risk and liquidity rules for small non-complex banks in order to ensure a proportionate framework for all banks within the EU;
  • a requirement for third-country institutions with significant activities in the EU to have an EU intermediate parent undertaking; and
  • enhanced minimum requirement for own funds and eligible liabilities (MREL) subordination rules for global systemically important institutions (G-SIIs) and other large banks.

The European Council press release indicates that the package of measures will be signed in the week of 20 May 2019 and will enter into force 20 days following its publication in the Official Journal of the EU (expected June 2019). The majority of new rules will begin applying mid-2021.