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8/12/2019 Banking and Insurance En

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Banking/Insurance

Legislation Main objectives Legislative process

Banks

Capital requirements for

banks CRD IV-CRR

Regulation 575/2013 (CRR)

on prudential requirements

for credit institutions and

investment firms and

amending Regulation (EU)

648/2012 (CRR); Directive

2013/36/EU on access to the

activity of credit institutions

and the prudential

supervision of credit

institutions and investment

firms, amending Directive2002/87/EC and repealing

Directives 2006/48/EC and

2006/49/EC.

CRD IV-CRR adapts the

international banking reform

better known as the Basel III

rules.

To set stricter capitalrequirements for banks (equity)

and establish liquidityrequirements.

To impose more stringent criteriafor the financial instruments

qualifying as core tier one capital.

To facilitate lending to small andmedium-sized enterprises

(SMEs).

To limit bankers' bonuses andimpose transparency requirements

on banks (eg profit reporting).

PROCESS COMPLETED

The reform came into applicationon 1 January 2014.

Deposit guarantee schemes

Revision of Directive

94/19/EC on deposit

guarantee schemes

(directive).

The directive in force

protects bank deposits of up

to 100,000

To further align rules on depositguarantee schemes. A provision

provides for faster repayment of

deposits when a bank is in

difficulty.

To regulate more closely thefinancing of national deposit

guarantee schemes by requiring

ex ante financing by banks of

these schemes.

PROCESS COMPLETED

The Council and EP reached a

political compromise in December

2013. The Council confirmed it in

first reading in March; the EP

validated it on second reading on

15 April.

Bank resolution

Directive establishing a

framework for the

recovery and resolution

of credit institutions and

investment firms and

To prevent future rescues offailing banks out of public funds.This will entail:

Setting up a European frameworkfor the orderly restructuring of

distressed or failing banks based

on three pillars: crisis prevention;

early intervention by national

resolution authorities; bank

PROCESS COMPLETED

The Council and EP worked out a


2013.

The EP validated it on 15 April

and the Council confirmed it on 6

May.


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amending several

directives.

resolution based on different

tools.

Requiring each state to set up aresolution fund financed by banks

(ex ante financing).

The rules are set to apply from 1

January 2016.

Bank supervisionmechanism

Creation of a single

supervisory mechanism

(SSM) for eurozone banks.

The SSM is open to banks

outside the eurozone.

Regulation 1024/2013/EU

gives the ECB supervisory

powers; Regulation

1022/2013/EU amends theregulation establishing the

European Banking Authority

(EBA).

To supervise at European levelbanks established in the 18 and in

other member states that wish to

participate.

The European Central Bank(ECB), which now includes a

board of supervisors, plays the

central supervisory role and

cooperates closely with national

authorities.

PROCESS COMPLETED

Formal adoption in November

2013.

The ECB will fully exercise its

functions from November 2014.

Bank resolution mechanism

Creation of a single

resolution mechanism (SRM)

for eurozone banks.

The SRM is open to states

not in the eurozone.

Regulation establishing a

single authority charged with

restructuring failing banks;

intergovernmental agreement

on the functioning on a single

resolution fund capitalised in

advance by banks in order to

support restructuring plans.

Creation of a single authority incharge of restructuring large,

often transnational, banks. This

authority includes a resolutionboard (a European agency made

up primarily of national

authorities and permanent

members) that will draw up

resolution plans to be validated in

many cases by the European

Commission. In other cases, the

EU Council may validate plans.

FORMAL ADOPTION

PENDING

The Council and EP worked out a


2013. The EP validated it on 15

April; the Council still has to

adopt it. Besides, 26 member

states signed the

intergovernmental agreement on a

single resolution fund on 21 May.

The single resolution mechanism

is expected to enter into force on 1

January 2015 and the bail-inand

resolution functions would apply

from 1 January 2016.

Restructuring of banking

activities

Regulation on structural

measures improving the

The legislation potentially targetsaround 30 banks considered too

large, too complex and too

interconnected to be allowed to go

insolvent ('too big to fail').

IN PROGRESS

Commissioner Michel Barnier

(Internal Market) has said that the

Commission will propose


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resilience of EU credit

institutions To empower bank supervisors to

require certain institutions to

transfer part of their activities to a

separate entity, in accordance

with a long procedure.

To ban purely speculativeproprietary trading.

legislation before the end of

summer.

Insurance

Financial conglomerates

(combining banks,

investment and insurance

firms)

Directive 2011/89/EU

amending Directives

98/78/EC, 2002/87/EC and

2006/48/EC as regards

supplementary supervision of

financial entities in a

financial conglomerate

(directive).

Tighter supervision of financialconglomerates and stricter

transparency rules.

PROCESS COMPLETED

Adopted formally in November

2011.

Prudential requirements

for insurance firms

Solvency II

Directive 2009/138/EC on

the taking-up and pursuit of

insurance and reinsuranceactivities (Solvency II).

To establish stricter solvencyrequirements for insurers

(including capital requirements).

Insurance companies own fundsmust be calculated in terms of

risks associated with assets. Inother words, assets and liabilities

are valued at market value rather

than book value.

PROCESSUS COMPLETED

Adopted formally in November

2009.

The text will apply from 1

January 2016.

New financial supervision

architecture/adaptation

Omnibus II

Directive amending

Directives 2003/71/EC and2009/138/EC in respect of

the powers of the European

Securities and Markets

Authority and the

European Insurance and

Occupational Pensions

Authority, known as the

Omnibus II directive.

To adapt the Solvency II directive(above) to the new insurance

supervision architecture.

To apply specific measures toinsurance products bearing along-term guarantee to keep from

penalising insurance companies'

long-term investments.

PROCESS COMPLETED

The Council confirmed on 14

April the political compromise

reached with the European

Parliament, which had alreadyvalidated it in March.

The text will apply from 1

January 2016.


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Occupational retirement

Revision of Directive

2003/41/EC on institutions

for occupational retirement

provision (IORP II).

To stimulate the role of theseinstitutional investors in financing

European growth.

IN PROGRESS

First reading

The EP has to adopt its position

and the Council its generalapproach. The two institutions

will then have to reach a political

compromise.

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