Next event: Indicative plenary sitting date 2024/04/22 more...
- Approval in committee of the text agreed at 1st reading interinstitutional negotiations 2023/12/11
- Coreper letter confirming interinstitutional agreement 2023/12/06
- Text agreed during interinstitutional negotiations 2023/12/06
- Committee decision to enter into interinstitutional negotiations confirmed by plenary (Rule 71) 2023/02/15
- Committee decision to enter into interinstitutional negotiations announced in plenary (Rule 71) 2023/02/13
- Committee report tabled for plenary, 1st reading 2023/02/10
- Vote in committee, 1st reading 2023/01/24
- Committee decision to open interinstitutional negotiations with report adopted in committee 2023/01/24
- Amendments tabled in committee 2022/08/22
- Amendments tabled in committee 2022/08/22
- European Central Bank: opinion, guideline, report 2022/06/30
- Committee draft report 2022/06/01
Progress: Awaiting Parliament's position in 1st reading
Role | Committee | Rapporteur | Shadows |
---|---|---|---|
Lead | ECON | FERNÁNDEZ Jonás ( S&D) | KARAS Othmar ( EPP), POULSEN Erik ( Renew), NIINISTÖ Ville ( Verts/ALE), ZANNI Marco ( ID), VAN OVERTVELDT Johan ( ECR), PAPADIMOULIS Dimitrios ( GUE/NGL) |
Lead committee dossier:
Legal Basis:
TFEU 053-p1
Legal Basis:
TFEU 053-p1Subjects
Events
The Committee on Economic and Monetary Affairs adopted a report by Jonás FERNÁNDEZ (S&D, ES) on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks, and amending Directive 2014/59/EU.
As a reminder, the Commission’s proposal of the capital requirements directive aimed at strengthening the regulatory and supervisory landscape for banks operating in the EU by closing loopholes for third country branches, by enhancing and harmonising supervisory tools and powers in important areas and by ensuring that supervisors are sufficiently independent from economical and political influence and by incorporating environmental, social and governance related risks.
The committee responsible recommended that the European Parliament's position adopted at first reading under the ordinary legislative procedure should amend the proposal as follows:
Proportionality
The amendment of Directive 2013/36/EU as regards supervisory powers, sanctions, third country branches and environmental, social and governance risks, and the amendment of Directive 2014/59/EU should be coherent with the logic of the banking union and lead to further harmonisation of the single banking market. It should always ensure proportionality of rules and aim at further reducing compliance and reporting costs, in particular for small and non-complex institutions.
Conditions for the authorisation of third country branches
Member States should require that third country undertakings establish a branch in their territory before commencing or continuing activities. New third country branches should not commence their activities in a Member State until the EBA and the third country competent authority have concluded a Memorandum of Understanding (‘MoU’). The MoU should provide a clear cooperation framework between the competent authorities, including exchange of information in on-going supervision, crisis management and resolution.
Classification of third country branches
The report stated that Member States may apply a stricter regulatory regime to all third country branches or branches from specific third countries.
Capital endowment requirement
Member States should require that third country branches maintain at all times a minimum capital endowment that is at least equal to:
(a) for class 1 third country branches, 3% of the branch’s average liabilities as reported for the three immediately preceding annual reporting periods, subject to a minimum of EUR 10 million;
(b) for class 2 third country branches, 0.5% of the branch’s average liabilities as reported for the three immediately preceding annual reporting periods, subject to a minimum of EUR 5 million.
Joint assessment of systemic third country branches
The report stipulates that joint assessments should be performed on the third country branches of the same third country group where they are established in two or more Member States and hold assets in an aggregate amount.
Power to require establishing a subsidiary
The committee proposed that Member States should ensure that competent authorities have the power to require third country branches to apply for authorisation where: (i) the third country branch has engaged in the past or is currently engaged in the performance of certain activities with customers or counterparties in other Member States or with other third country branches or subsidiary institutions of the same group; or (ii) the third country branch meets the systemic importance indicators or poses significant financial stability risks, or the aggregate amount of assets that a third country branch or branches in the Union that belong to the same group hold on their books in the Union as reported in accordance with Sub-section 4 is equal or higher to EUR 40 billion .
Designation and powers of the competent authorities
A more proportionate and targeted framework for cooling-off periods has been imposed for staff and members of governance bodies of competent authorities, before they can take up positions in supervised institutions. More specifically, the EBA should issue guidelines by 31 December 2024 on conditions which allow competent authorities to waive, increase or decrease the cooling off periods for specific members of the management governance bodies and staff.
Regulatory technical standards on cooperation with authorities responsible for supervision of anti-money laundering
EBA should, after consulting the European Data Protection Board, issue regulatory technical standards on the mechanisms for cooperation and information exchange between competent authorities and:
(a) the authorities responsible for supervision of anti-money laundering in the Member State;
(b) the authorities, in the context of identifying serious breaches of anti-money laundering rules.
The EBA should issue those regulatory technical standards by 12 months from date of entry into force of this amending Directive.
Environmental, social and governance risk
The report stated that institution’s exposures to environmental, social and governance risks should be assessed also on the basis of institutions’ plans. Institutions’ governance and risk management processes with regard to environmental, social and governance risks should be brought into line with the objectives set out in those plans.
The review and evaluation performed by competent authorities should include the assessment of the institutions’ plans and targets, as well as the progress made towards addressing the environmental, social and governance risks arising from the process of adjustment towards climate neutrality by 2050, as well as towards other relevant Union policy objectives in relation to environmental, social and governance factors.
PURPOSE: to amend Directive 2013/36/EU (the Capital Requirements Directive or CRD) as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks with a view to making the EU banking sector more resilient to potential future economic shocks.
PROPOSED ACT: Directive of the European Parliament and of the Council.
ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.
BACKGROUND: following the major financial crisis of 2008-2009, the EU and its G20 partners in the Basel Committee on Banking Supervision reached the Basel IIII agreement to make banks more resilient to potential economic shocks. Thanks to the reforms already implemented, the EU banking sector entered the COVID-19 crisis on a much more resilient footing. However, while the overall level of capital in EU banks is now satisfactory on average, some of the problems that were identified in the wake of the financial crisis have not yet been addressed.
The proposed amendment to Directive 2013/36/EU (the Capital Requirements Directive or CRD) is part of a legislative package that includes amendments to Regulation (EU) No 575/2013 (the Capital Requirements Regulation or CRR) and a separate legislative proposal to amend the Capital Requirements Regulation in the area of resolution (the so-called ‘daisy chain’ proposal).
This package of proposals marks the final step in this reform of banking rules and faithfully implements the international Basel III agreement, while taking into account the specific features of the EU's banking sector.
CONTENT this proposal amending Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms aims to contribute to financial stability and to the steady financing of the economy in the context of the post-COVID-19 crisis recovery .
The proposal includes provisions on the following issues:
Implementation of the Basel III reform
The proposal ensures proportionality and seeks to further reduce compliance costs, particularly for smaller banks, without relaxing prudential standards.
The proposal aims to ensure that the ‘internal models’ used by banks to calculate their capital requirements do not underestimate risks, thereby ensuring that the capital needed to cover these risks is sufficient. This will make it easier to compare risk-based capital ratios between banks, restoring confidence in these ratios and in the soundness of the sector in general.
Independence of competent authorities
The proposal clarifies how Member States should ensure that the independence of competent authorities, including their staff and governance bodies, is preserved. Minimum requirements are introduced to prevent conflicts of interest, while supervisors would be in a better position to check the good repute and competence of bank managers.
Strengthened supervisory powers
For an efficient Banking Union, the convergence of supervisory practices and a sufficient degree of harmonisation of the various national rules framing the supervisory action are needed. The supervisory authorities would be better able to verify the soundness of transactions . Moreover, this proposal expands the list of supervisory powers available in the CRD to competent authorities to cover operations such as acquisitions by a credit institution of a material holding in a financial or non-financial entity, the material transfer of assets or liabilities and merger or divisions. These supervisory powers will ensure that competent authorities are notified in advance, have at their disposal all the necessary information to perform a prudential assessment of these operations, and can ultimately oppose the completion of operations detrimental to the prudential profile of the supervised entities undertaking them.
Review of the administrative sanctioning regime
To ensure a level playing field in the field of sanctioning powers, Member States are required to provide for administrative penalties, periodic penalty payments and other administrative measures in relation to breaches of national provisions transposing the CRD and the CRR. The proposal requires Member States to lay down rules on the cooperation between competent authorities and judicial authorities in cases of duplication of criminal and administrative proceedings and penalties on the same breach.
Environmental, social and governance (ESG) risks
New provisions are introduced to address the significant risks that credit institutions will face due to climate change and the profound economic transformations that are needed to manage this and other ESG risks.
To this end, the proposal sets out clear requirements for the identification, measurement, management and monitoring of sustainability risks within ESG risk management frameworks. Supervisors would have the power to assess these risks as part of their regular supervisory reviews, including through climate stress tests carried out by themselves and by banks.
Third country branches (TCBs)
As of 31 December 2020, there were 106 TCBs in the EU distributed across 17 Member States. At present, these branches are mainly subject to national legislation, harmonised only to a very limited extent. The proposal seeks to harmonise EU rules in this area, which will allow supervisors to better manage risks related to these entities, which have significantly increased their activity in the EU over recent years.
Reducing banks’ administrative costs
The proposal aims to centralise disclosures of prudential information with a view to increased access to prudential data and comparability across industry. The centralisation of disclosures in a single access point established by the EBA is also aimed at reducing the administrative burden for institutions, especially small and non-complex ones.
Documents
- Approval in committee of the text agreed at 1st reading interinstitutional negotiations: PE757.234
- Coreper letter confirming interinstitutional agreement: GEDA/A/(2023)006587
- Text agreed during interinstitutional negotiations: PE757.234
- Committee report tabled for plenary, 1st reading: A9-0029/2023
- Amendments tabled in committee: PE734.261
- Amendments tabled in committee: PE735.693
- European Central Bank: opinion, guideline, report: CON/2022/0016
- European Central Bank: opinion, guideline, report: OJ C 248 30.06.2022, p. 0087
- Committee draft report: PE731.819
- Document attached to the procedure: SEC(2021)0380
- Document attached to the procedure: SWD(2021)0320
- Document attached to the procedure: EUR-Lex
- Document attached to the procedure: SWD(2021)0321
- Legislative proposal published: COM(2021)0663
- Legislative proposal published: EUR-Lex
- Document attached to the procedure: SEC(2021)0380
- Document attached to the procedure: SWD(2021)0320
- Document attached to the procedure: EUR-Lex SWD(2021)0321
- Committee draft report: PE731.819
- European Central Bank: opinion, guideline, report: CON/2022/0016 OJ C 248 30.06.2022, p. 0087
- Amendments tabled in committee: PE734.261
- Amendments tabled in committee: PE735.693
- Coreper letter confirming interinstitutional agreement: GEDA/A/(2023)006587
- Text agreed during interinstitutional negotiations: PE757.234
History
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