The European Commission’s expert group on banking, payments and insurance has published the minutes of a meeting on bank regulation and supervision that took place on 26 April 2016. Among other things, the expert group discusses preparations for the Commission’s forthcoming review of, and proposed amendments to, the Capital Requirements Regulation (CRR) and the Capital Requirements Directive IV (CRD IV).
The Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) presented the envisaged timeline for the proposal to amend the CRR and CRD IV and the topics that would be included in the proposal.
The minutes note that the DG FISMA was asked if the Commission would include in its proposal the current Basel Committee on Banking Supervision (Basel Committee) review of risk weighted assets, the review of the operational risk framework, leverage ratio buffers and the review of the macro-prudential framework. On the first two topics, the DG FISMA stated that the Basel Committee’s work is still on-going and would be completed by the end of this year. In light of this it could not be included in the proposal. On the leverage ratio buffers, the minutes state that DG FISMA indicated that given the lack of agreement in the Basel Committee, it did not envisage including them in the proposal. On the macro-prudential review, DG FISMA indicated that it did not envisage including the results of the review in the proposal.
The minutes also note that the meeting was largely dedicated to discussing the options and discretions (ONDs) in the CRR and CRD IV. The discussion focussed on the following ONDs:
- large exposures (article 400(2)(d),(e), and (f) CRR);
- favourable risk weighting for public sector entities (article 116(4) CRR);
- deduction/risk-weighting of banks’ investments in insurance undertakings (article 49(1) CRR);
- waiver of Basel I floors (article 500(5) CRR);
- accelerated deduction of the stock of deferred tax assets (article 478(2)(3) CRR);
- grandfathering period for own funds instruments (article 486(6) CRR);
- requiring supervisory reporting in accordance with IFRS standards (article 24(2) CRR);
- prohibiting deferred tax credits (article 39(2) CRR); and
- exempting from initial capital pre-1979 institutions without separate own funds (article 12(3) CRD IV).