EU reforms banks to ‘support growth and restore confidence’

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The Commission presented a comprehensive package of reforms to further strengthen the resilience of EU banks.

This proposal builds on existing EU banking rules and aims to complete the post-crisis regulatory agenda by making sure that the regulatory framework addresses any outstanding challenges to financial stability, while ensuring that banks can continue to support the real economy.

Banks have a central role in financing the economy and for promoting growth and jobs. They are a key source of funding for households and businesses. In the wake of the financial crisis, the EU pursued an ambitious reform of the financial regulatory system to bring back financial stability and market confidence. Today’s proposals aim to complete this reform agenda by implementing some outstanding elements, which are essential to further reinforce banks’ ability to withstand potential shocks. The proposals also fine-tune some aspects of the new regulatory framework where necessary to make it more growth-friendly and proportionate to banks’ complexity, size and business profile. It also includes measures that will support SMEs and investment in infrastructure.

Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, said:

“Europe needs a strong and diverse banking sector to finance the economy. We need bank lending for companies to invest, remain competitive and sell into bigger markets and for households to plan ahead. Today, we have put forward new risk reduction proposals that build on the agreed global standards while taking into account the specificities of the European banking sector.”

The measures proposed today are also part of Commission’s ongoing work to reduce risk in the banking sector, as set out in the Communication “Towards the Completion of the Banking Union” (November 2015). They are also in line with the conclusions of the ECOFIN Council in June, where the Commission was invited to put forward relevant proposals no later than the end of 2016.

The proposals amend the following pieces of legislation:

  • The Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD) which were adopted in 2013 and which set out prudential requirements for credit institutions (i.e. banks) and investment firms and rules on governance and supervision;
  • The Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR) which were adopted in 2014 and which spell out the rules on the recovery and resolution of failing institutions and establish the Single Resolution Mechanism.

Today’s measures implement international standards into EU law, while taking into account European specificities and avoiding undue impact on the financing of the real economy. They also take into account the results of the Call for Evidence.

The proposals in detail