The European Commission’s work on the finalisation of the Basel III reforms in the European Union is gathering pace. Following its April 2018 public consultation on an additional set of prudential reforms that will implement in European law the December 2017 Basel Committee on Banking Supervision’s standard (Basel III: Finalising post-crisis reforms), the Commission has recently launched consultations with Member States’ experts. On 13 June 2019, the Commission hosted a meeting of its Expert Group on Banking, Payments and Insurance where it sought Member States’ views on the final elements of the Basel III framework. These include:

  1. Credit risk –  including exposures to unrated corporates and the increase of risk sensitivity for specialised lending;
  2. Operational risk;
  3. Market risk;
  4. CVA risk – including the future status of exemptions that are currently provided under CRR;
  5. SFTs – including the minimum haircut floor framework; and
  6. Output floor.

In terms of timeline and next steps, the European Banking Authority (EBA) is expected to submit its report to the Commission with an assessment of the capital impact of the upcoming reform package and any identified implementation challenges over the coming weeks. Prior to that, on 2 July the EBA will host a public hearing  in Paris, where it will present the quantitative findings and its main policy recommendations. The Commission is then expected to launch another round of public consultations on the content of the upcoming banking package later this year.