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The adoption of the Basel II guidelines in 2004 was followed at EU level by a recast of the Banking Directive on the one hand (Directive 2006/48/EC) and the Capital Adequacy Directive (Directive 93/6/EEC) on the other hand (Directive 2006/49/EC). These two Directives were officially adopted on 14 June 2006 and published in the Official Journal ...
Previous rules were found in the Capital Requirements Directives (2006/48 and 2006/49). Together the new rules are sometimes referred to in the media as the “CRD IV” package. It applies from 1 January 2014. This is the third set of amendments to the original directives, following two earlier sets of revisions adopted by the Commission in ...
Thus the actual capital requirement is between 11 and 13.5% (including Capital Conservation Buffer and Counter Cyclical Buffer). [ 14 ] In response to a questionnaire released by the Financial Stability Institute (FSI), 95 national regulators indicated they were to implement Basel II, in some form or another, by 2015.
In 1988, the Basel Committee published a set of minimum capital requirements for banks. This is also known as the 1988 Basel Accord, and was enforced by law in the Group of Ten (G-10) countries in 1992. A new set of rules known as Basel II was developed and published in 2004 to supersede the Basel I accords.
The Capital Requirements Directives contain analogous rules, with a similar goals, for banks. To administer the new rules, the European System of Financial Supervision was established in 2011, and consists of three main branches: the European Securities and Markets Authority in Paris, the European Banking Authority in London and the European ...
The Basel Committee formulates broad supervisory standards and guidelines and recommends statements of best practice in banking supervision (see bank regulation or "Basel III Accord", for example) in the expectation that member authorities and other nations' authorities will take steps to implement them through their own national systems.
Basel III requires banks to have a minimum CET1 ratio (Common Tier 1 capital divided by risk-weighted assets (RWAs)) at all times of: . 4.5%; Plus: A mandatory "capital conservation buffer" or "stress capital buffer requirement", equivalent to at least 2.5% of risk-weighted assets, but could be higher based on results from stress tests, as determined by national regulators.
The Directives provisions on freedom of establishment had determined that minimum capital was a disproportionate means to achieve the aim of protecting creditors. These decisions have only been made in relation to national laws regarding private companies, and not yet the EU Directive itself.