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

Martin Neisen and Hermann Schulte-Mattler
Additional contact information
Martin Neisen: 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 3, 224-241

Abstract: Two banking packages are needed in Europe to implement the Basel recommendations of the standard ‘Basel III: Finalising post-crisis reforms’ into European supervisory regulation. The Basel Committee on Banking Supervision (BCBS) and European supervision use the abbreviation ‘Basel III’ for the reforms. They thus give the impression to those unfamiliar with the subject that the supervisory authority is merely updating and expanding the approaches and ideas published in the Basel III papers of 2010 in response to the financial crisis of 2007/2008. In the overall picture, however, this is not the case. In addition to the usual updating of known standards, the supervisory authority is introducing a large number of entirely new approaches and regulations that did not exist in this form previously. Banking sector is rightly using the term ‘Basel IV’ instead of ‘Basel III’ for this regulatory change package, which is the most comprehensive ever at both the international and European levels. The first European banking package was adopted in June 2019 and is currently being implemented. It is also known as the ‘CRD-V-CRR-II package’, as it makes significant changes to the capital requirements directive (CRD) and capital requirements regulation (CRR) in particular. This paper — like Part I which appeared in Journal of Risk Management in Financial Institutions Vol. 13, 2 — analyses the remarkable changes that will pose notable challenges for many banks. We use a four-pillar concept to differentiate the most critical issues. The publication of the second European banking package for the full implementation of Basel IV is still pending. The contents of the ‘CRD-VI-CRR-III package’ will therefore only be analysed at a later date.

Keywords: AIFs; Basel III finalisation; fundamental review of the trading book (FRTB); interest rate risk in the banking book (IRRBB); minimum requirements for own funds and eligible liabilities (MREL); standardised approach for measuring counterparty credit risk (SA-CCR); STS securitisations; UCITS funds (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hstalks.com/article/5656/download/ (application/pdf)
https://hstalks.com/article/5656/ (text/html)
Requires a paid subscription for full access.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2020:v:13:i:3:p:224-241

Access Statistics for this article

More articles in Journal of Risk Management in Financial Institutions from Henry Stewart Publications
Bibliographic data for series maintained by Henry Stewart Talks ().