CRD V/CRR II: A comprehensive synopsis of the first European step towards implementing Basel IV (Part I)

Martin Neisen and Hermann Schulte-Mattler
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Martin Neisen: Partner, PricewaterhouseCoopers, Germany
Hermann Schulte-Mattler: Professor of Finance, Dortmund University of Applied Sciences, Germany

Journal of Risk Management in Financial Institutions, 2020, vol. 13, issue 2, 114-125

Abstract: ‘Basel III: Finalising post-crisis reforms’ — often referred to as ‘Basel IV’ by the banking industry — is the most extensive regulatory change package of all time. By using the term Basel III instead of Basel IV, the Basel Committee on Banking Supervision (BCBS) may wish to give the impression that only its approaches and ideas from the Basel III papers of 2010 are updated and expanded; the work is, so to speak, complete. Nothing could be less consistent with the facts. Basel IV extends the prudential rules with known standards on the one hand, and on the other, it introduces entirely new approaches that until now have not existed. For transposing the Basel IV recommendations into the European supervisory regulations, two banking packages are necessary. The first package was adopted in June 2019. In particular, the implementation of the amendments to the capital requirements directive (CRD V) and capital requirements regulation (CRR II) will present many banks with major challenges. The second package is still in the planning stage. A draft of the second package, probably including CRD VI and CRR III, is anticipated in mid-2020.

Keywords: Basel III finalisation; consolidation; disclosure; European banking package; large exposure; leverage ratio; NSFR; own funds; P2G; P2R; SME; SREP; step-in risk; TLAC (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2020
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