On 27 October 2021, the European Commission adopted a review of EU banking rules (the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD IV)). These new rules will ensure that EU banks become more resilient to potential future economic shocks, while contributing to Europe's recovery from the COVID-19 pandemic and the transition to climate neutrality.

Following the financial crisis, the EU embarked on wide-ranging reforms of its banking rules to increase the resilience of the EU banking sector. Thanks to these reforms, the EU banking sector entered the COVID-19 crisis in much better shape. However, while the overall level of capital in EU banks is now on average satisfactory, some of the problems that were identified in the wake of the financial crisis have not yet been addressed.

The package is comprised of the following elements

  • Implementing Basel III – strengthening resilience to economic shocks:
    The package implements the international Basel III agreement, while taking into account the specific features of the EU's banking sector, for example when it comes to low-risk mortgages
  • Sustainability – contributing to the green transition:
    The new rules will require banks to systematically identify, disclose and manage sustainability risks (environmental, social and governance or ESG risks) as part of their risk management
  • Stronger enforcement tools – ensuring sound management of EU banks and better protecting financial stability:
    The package provides stronger enforcement tools for supervisors overseeing EU banks

Documents

Related information

  • Prudential requirements

    EU rules on prudential requirements aim to make the financial sector more stable while ensuring it can support the economy.