Banking package (Basel III): deal underpins financial stability without undermining EU banking competitiveness

The Renew Europe Group welcomes today’s inter-institutional agreement on the European Capital Requirements regulation and directive, aiming at strengthening the framework for banking risk supervision by introducing Basel III standards in European legislation. The deal ensures European banks remain well capitalised while also preserving their competitiveness, particularly compared to their international competitors. The agreement, which has involved lengthy negotiations, is a milestone towards a more integrated and resilient banking sector.

The EU becomes the first major banking jurisdiction to agree on the transposition of the Basel criteria even before their entry into force (scheduled for January 2025), with a harmonised supervisory approach that takes into account the European specificities, thus ensuring that credit continues to flow to citizens and businesses, particularly SMEs, and that the economic growth after COVID 19 pandemic and with the current war in Ukraine is not endangered. The agreement also foresees other relevant issues like the treatment of crypto-assets exposures by banks and how Environmental, Social and Governance (ESG) risks are reflected on financial benchmarks.

MEP Gilles Boyer (Horizons, France), Renew Europe´s shadow rapporteur on the Capital Requirements Regulation (CRR), declared:

“These reinforced rules ensure greater financial stability of Europe's banks while also ensuring access for Europe's companies and households to much needed financing to sustain economic growth and fund the green transition. We believe that the modified treatment of securitised products will contribute to the continued development and dynamism of Europe's Capital Markets Union. Important steps have also been made to ensure improved reporting and disclosures of institutions to fossil fuels. We ensured a range of safeguards have been put in place to enable European legislators to review this legislation if un-level playing fields arise following other jurisdictions' implementation of the Basel standard. With this agreement the EU helps to ensure that Europe's banks are better able to face the challenges and opportunities of the future”.

MEP Erik Poulsen (Venstre, Denmark’s liberal party), Renew Europe´s shadow rapporteur on the Capital Requirements Directive (CRD), stated:

“With today’s agreement on the CRD, we ensure that banks prepare for the financial risks that climate change will bring. Furthermore, we are introducing new, harmonised rules for Fit&Proper assessments such that the management of banks are fit for purpose. Finally, we introduce new safeguards for third-country banks located in the EU such that we are able to withstand any financial risk while ensuring that the European banking landscape remains open for third-country banks such that our European companies can access financing when doing business abroad”.

Note to editors

The Basel III standards are an international set of voluntary rules on bank capital adequacy, stress testing, and liquidity requirements. They were agreed in 2017 by the members of the Basel Committee on Banking Supervision (BCBS) to target the deficiencies in financial regulation and prudential supervision exposed by the Great Financial Crisis (2008). The implementation of these standards is expected to take place globally before January 2025.