Directive (EU) 2024/1619

What it is

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 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: 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. 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. The report stated that Member States may apply a stricter regulatory regime to all third country branches or branches from…

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