Banking and Insurance En

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 Directive
2002/87/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 capital
requirements for banks (equity)
and establish liquidity
requirements.
 To impose more stringent criteria
for the financial instruments
qualifying as core tier one capital.
 To facilitate lending to small and
medium-sized enterprises
(SMEs).
 To limit bankers' bonuses and
impose transparency requirements
on banks (eg profit reporting).
PROCESS COMPLETED

The reform came into application
on 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 deposit
guarantee schemes. A provision
provides for faster repayment of
deposits when a bank is in
difficulty.
 To regulate more closely the
financing 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 of
failing banks out of public funds.
This will entail:
 Setting up a European framework
for 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
political compromise in December
2013.

The EP validated it on 15 April
and the Council confirmed it on 6
May.
amending several
directives.

resolution based on different
tools.
 Requiring each state to set up a
resolution fund financed by banks
(ex ante financing).


The rules are set to apply from 1
January 2016.



Bank supervision
mechanism

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 the
regulation establishing the
European Banking Authority
(EBA).



 To supervise at European level
banks 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 in
charge of restructuring large,
often transnational, banks. This
authority includes a resolution
board (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
political compromise in December
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-in and
resolution functions would apply
from 1 January 2016.


Restructuring of banking
activities

Regulation on structural
measures improving the
 The legislation potentially targets
around 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
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 speculative
proprietary 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 financial
conglomerates 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 reinsurance
activities (Solvency II).



 To establish stricter solvency
requirements for insurers
(including capital requirements).
 Insurance companies’ own funds
must be calculated in terms of
risks associated with assets. In
other 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 and
2009/138/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 to
insurance products bearing a
long-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 already
validated it in March.

The text will apply from 1
January 2016.



Occupational retirement

Revision of Directive
2003/41/EC on institutions
for occupational retirement
provision (IORP II).
 To stimulate the role of these
institutional investors in financing
European growth.



IN PROGRESS

First reading

The EP has to adopt its position
and the Council its general
approach. The two institutions
will then have to reach a political
compromise.