What the EU is doing and why
The EU prudential requirements that were introduced in the aftermath of the global financial crisis ensure that banks are better able to withstand liquidity shocks and absorb losses.
These rules, which are part of the EU single rulebook, aim to strengthen the resilience of the EU banking sector, while ensuring that banks continue to finance economic activity and growth.
The prudential framework is composed of a directive – the Capital Requirements Directive (CRD V) – and a Regulation – the Capital Requirements Regulation (CRR II). These rules put the Basel III international standards into EU law.
International banking regulation standards under Basel III
The Basel Committee on Banking Supervision (BCBS) sets the standards for international banking prudential regulation. It is a forum for cooperation on the supervision of the banking system and its membership is made up of central banks and supervisory authorities from 28 jurisdictions.
The BCBS drew up Basel III as non-legally binding international standards focusing on “internationally active banks”. The EU implementation of these standards takes the form of binding EU law. The EU has deliberately chosen to apply the Basel standards to all EU banks (as well as investment firms), because we want to build a strong single market for all EU domiciled banks, active within and across the 27 EU Member States, as well as globally.
The EU has actively contributed to developing the BCBS standards on capital, liquidity and leverage. The rules introduced in the EU are in line with the overall objectives of the Basel III framework but require tailoring the Basel standards where appropriate to fit the diversity of the banking system at EU and national level and to address proportionality concerns with regards to smaller and domestically-oriented banks.
Policy making timeline
- December 2023Endorsement and publication – Prudential requirements
- 27 June 2023Political agreement - Prudential requirements
- 27 October 2021Legislative proposal - Prudential requirements
- 24 July 2020Legislative proposal - Prudential requirements
- 28 April 2020Legislative proposal - Prudential requirements
- 21 October 2019Consultation - Alternative standardised approach for market risk
Targeted consultation on the alternative standardised approach for market risk.
End date: 11 November 2019
- 11 October 2019Consultation - Basel III
Public consultation: Implementing the final Basel III reforms in the EU.
End date: 3 January 2020
- 20 May 2019Legislation - Prudential requirements
Adoption of the Capital Requirements Directive V (CRD V) and of the Capital Requirements Regulation II (CRR II).
- 23 November 2016Legislative proposal - Prudential requirements
- 26 June 2013Legislation - Prudential requirements
Adoption of the Capital Requirements Directive IV (CRD IV) and of the Capital Requirements Regulation (CRR).
- 25 March 2013Consultation
Green paper on the long-term financing of the European economy
End date: 25 June 2013
The Banking Prudential Requirements Directive (CRD V) governs the access to deposit-taking activities. It establishes rules on
- corporate governance of banks
- powers and responsibilities of national authorities (e.g. authorisation, supervision, capital buffers and sanctions)
- requirements on internal risk management that are tied to national company laws
Basic information
- Text of the CRD V (2019/878/EU)
- Summary of the legislation: Banks and investment firms – prudential supervision
Transposition by EU Member States
- The CRD V was transposed by all EU Member states into their national law.
- Transposition status of the CRD V (concerning credit institutions) by EU Member States
- Transposition status of the CRD V (concerning investment firms) by EU Member States
- Transposition history of the CRD V by EU Member States
Legislative history
Basic information
- Text of the CRD IV (2013/36/EU)
- Summary of the legislation: Banks and investment firms – prudential supervision
Delegated and implementing acts
Transposition by EU Member States
- The CRD IV was transposed by all EU Member states into their national law.
- Transposition history of the CRD IV by EU Member States
Legislative history
The Regulation on Prudential Requirements for Credit Institutions and Investment Firms (CRR II) establishes the prudential requirements that institutions need to respect. It sets out
- the rules for calculating capital requirements
- reporting and general obligations for liquidity requirements
Basic information
Legislative history
Basic information
- Text of the CRR (575/2013/EU)
- Summary of the legislation: Prudential requirements for credit institutions and investment firms