Brussels, 1st October 2008
The European Commission has put forward a revision of EU rules on capital requirements for banks that is designed to reinforce the stability of the financial system, reduce risk exposure and improve supervision of banks that operate in more than one EU country. Under the new rules, banks will be restricted in lending beyond a certain limit to any one party, while national supervisory authorities will have a better overview of the activities of cross-border banking groups. The proposal, which amends the existing Capital Requirements Directives, reflects extensive consultation with international partners, Member States and industry. It now passes to the European Parliament and the Council of Ministers for consideration.
Internal Market and Services Commissioner Charlie McCreevy said: "These new rules will fundamentally strengthen the regulatory framework for EU banks and the financial system. I believe that they are a sensible and proportionate response to the financial turmoil we are experiencing. Basic rigour, transparency and prudence are key to a healthy and stable banking system."
Proposed amendments to the Capital Requirements Directives
The purpose of the Capital Requirements Directives (2006/48/EC and 2006/49/EC) is to ensure the financial soundness of banks and investment firms. Together they stipulate how much of their own financial resources banks and investment firms must have in order to cover their risks and protect their depositors. This legal framework needs to be regularly updated and refined to respond to the needs of the financial system as a whole. The main changes proposed are as follows:
The proposed amendments are, in the main, a direct follow-up to the Roadmap for the current financial turmoil agreed by EU Finance Ministers. In part, they are also a response to the recent recommendations of the G-7 Financial Stability Forum. The European Council has expressed a strong sense of urgency emphasising that the measures should be adopted by April 2009.
The proposal is available at: