1. BANK REGULATION
1.1 Prudential Regulation
a) General
(i) EU
ECON: Study on the EU Banking Sector and Competitiveness
Status: Final
The study on enhancing EU competitiveness in the banking sector, requested by the ECON, has been published by the Economic Governance and EMU Scrutiny Unit. The study emphasises the importance of a resilient and efficient banking sector for EU competitiveness. Building on its analysis, the study recommends that, to achieve this, the EU should first prioritise the defragmentation of the banking market, and then, simplify and streamline the prudential framework for banks without compromising resilience.
In line with these priorities, it sets out the following recommendations for the EC to address in its forthcoming 2026 report on the EU banking sector: (i) completion of the Banking Union to enhance the EU-wide allocation of credit by moving closer to the goal of a single banking system and to strengthen financial resilience by eliminating the threat of the bank-sovereign cycle; (ii) integration of macroprudential decision-making in the banking union and simplifying the capital stack, including the set of loss-absorbing requirements, to reduce complexity and allow banks, particularly medium-sized ones, to focus more on core lending activities; and (iii) complementary reforms as additional options to support the two higher-priority recommendations above, including: (a) elimination of national gold plating; (b) harmonisation of accounting, by considering the imposition of mandatory international financial reporting standards (IFRS) for consolidated financial statements of all EU banks, and potentially a simplified IFRS for SMEs for individual accounts; (c) enhancement of consumer protection, starting with a comprehensive comparison of consumer protection regimes in all member states; and (d) improving supervisory practices.
Date of publication: 26/05/2025
(ii) International
BCBS: Discussion of key initiatives
Status: Final
The BCBS has published the results from its meeting to discuss a range of initiatives. The discussions focused on: (i) recent market developments and the financial stability outlook for the global banking system; (ii) progress on efforts to strengthen supervisory effectiveness following the 2023 banking turmoil. An update on the outcome of this work will be published by the end of the year; (iii) comments received to the BCBS consultation on third-party risk management in the banking sector. The BCBS aims to finalise principles for third-party risk management by the end of 2025; (iv) the use of technological innovation to make Pillar 3 disclosures more accessible in machine-readable formats. The BCBS plans to consult on this proposal by the end of the year; and (v) prioritising the analysis of financial risks from extreme weather events. The BCBS is also mandated to publish the voluntary climate-related financial risk disclosure framework, which will be released in June.
Date of publication: 21/05/2025
Status: Final
The FSB has published a speech delivered by Martin Moloney, Deputy Secretary General of the FSB, at the International Council of Securities Associations' Annual General Meeting on the potential for reforming financial regulation in a way that supports, rather than stifles, economic growth. Mr Moloney places particular emphasis on pursing sustainable economic growth, supported by stable financial markets, for effective regulatory reform and warns against cycles of deregulation and re-regulation. He urges policymakers to critically assess and streamline existing regulatory regimes, noting that both legislative and rule-making processes often fall short in designing optimal regulatory frameworks. Mr Moloney outlines three key challenges with effective regulatory redesign: (i) complexity of objectives: regulatory tools must now serve multiple goals, which can make it difficult to calibrate them proportionately; (ii) industry consultation; while essential, industry feedback tends to gravitate toward consensus on the 'lowest common denominator', not necessarily reflecting the changes that industry would most benefit from; and (iii) global interdependence; regulatory reform is constrained by the need for international consistency as jurisdictions cannot diverge significantly from global norms when creating national-based legislation without facing cross-border consequences.
Date of publication: 20/05/2025
Status: Final
The BCBS has published a press release regarding the results of the recent meeting by the Group of Central Bank Governors and Heads of Supervision (GHOS). In particular, the participants unanimously reaffirmed their expectations to implement Basel III in full and consistently as soon as possible, noting that approximately 70% of member jurisdictions have now implemented, or will shortly implement, the standards. The GHOS tasked the Committee with continuing to monitor and assess the full and consistent implementation of Basel III. GHOS members also discussed the Committee's proposed Pillar 3 disclosure framework for climate-related financial risks. The Basel Committee will publish a voluntary disclosure framework for jurisdictions to consider. In addition, the GHOS discussed the Committee's broader work on climate-related financial risks and tasked the Committee with prioritising its work to analyse the impact of extreme weather events on financial risks.
Date of publication: 12/05/2025
b) Solvency/Own funds issues
(i) Germany
BaFin: English translation on the General Administrative Act ordering a systemic risk buffer under Section 10e of the KWG (Englische Übersetzung zur Allgemeinverfügung zur Anordnung eines Kapitalpuffers für systemische Risiken nach § 10e KWG)
Status: Final
BaFin has published an English translation on its updated General Administrative Act on the establishment of a capital buffer for systemic risks pursuant to Section 10e of the German Banking Act, establishing a decrease of the sectoral systemic risk buffer for residential mortgage loans from 2% to 1%. That is because BaFin found that the vulnerabilities of the German real estate market have declined significantly, even though they have not been fully eliminated. The lowering of the systemic risk buffer from 2% to 1% will cause a decrease of around €2 bn to €2.5 bn in the capital currently contained in the banking system. This constitutes around 0.4% of the Core Tier 1 capital in the banking sector. The institutions are required to hold the reduced systemic risk buffer from 1 May 2025.
Date of publication: 07/05/2025
BaFin: Protocol on the 17th meeting of the expert committee on commercial transactions (Protokoll der 17. Sitzung des Fachgremiums Handelsgeschäfte)
Status: Final
BaFin has published the protocol on the 17th meeting of the expert committee on commercial transactions. In particular, it details discussions on issues caused by the delay of implementing the Fundamental Review of the Trading Book (FRTB) and about the meaning of Article 461a CRR in that context.
Date of publication: 06/05/2025
(ii) EU
EBA: Opinion on measures in accordance with Article 458 CRR
Status: Final
The EBA has published an opinion in response to a notification from the Norwegian Ministry of Finance regarding its intention to recalibrate the risk weight floor for Norwegian retail residential real estate exposures under Article 458 CRR. The measure, initially introduced on 31 December 2020 and extended until 30 June 2025, will result in the risk weight floor increasing from 20% to 25% starting from 1 July 2025 and remaining in force until 31 December 2026. It applies to all institutions established in Norway that use the Internal Ratings Based approach to calculate capital requirements for relevant exposures, seeking to address systemic risks arising from high household debt and rising real estate prices. The EBA supports the measure but invites the Ministry of Finance to closely monitor and review it to ensure proportionality and avoid overlaps with other regulatory requirements and measures already in place.
Date of publication: 23/05/2025
EBA: Repeal of Guidelines on specification of types of exposures to be associated with high risk
Status: Final
The EBA has repealed its Guidelines on the specification of types of exposures to be associated with high risk. The decision follows the application of the new CRR 3 which no longer includes the high-risk exposure class and now only refers to subordinated debt exposures. As a result, the guidelines are no longer applicable.
Date of publication: 16/05/2025
Status: Published in the OJ
Date of entry into force: 28/05/2025
The Delegated Regulation (EU) 2025/878 amending RTS on technical details of back-testing and profit and loss attribution requirements, the criteria for assessing the modellability of risk factors, and the treatment of foreign-exchange risk and commodity risk in the non-trading book, has been published in the OJ. The amendments are being made to reflect amendments made to the CRR which introduced a number of remaining BCBS requirements which are yet to be implemented and some clarifications, including changes to ensure alignment with BCBS international standards.
Key amendments include: (i) updated criteria for classifying trading desks and the removal of the aggregation formula for back-testing and profit and loss attribution requirements; (ii) adjusting documentation requirements to support competent authorities on whether institutions can use market data provided by third-party vendors in the assessment of modellability of risk factors; and (iii) clarifying the calculation of own funds requirements for market risk related to non-trading book positions.
Date of publication: 08/05/2025
Status: Published in the OJ
Date of entry into force: 25/05/2025
The Commission Delegated Regulation (EU) 2025/855 amending the RTS laid down in Delegated Regulation (EU) 2021/931 as regards the specification of the formula for calculating the supervisory delta of call and put options mapped to the commodity risk category, has been published in the OJ. The RTS specifies the formula for calculating the supervisory delta of call and put options mapped to the commodity risk category. This is based on the approach taken in the Basel Framework (CRE52) and, for the purposes of Article 279a(3) CRR, in the standardised approach for counterparty credit risk. The CRR III expanded the scope of Article 279a(3) CRR to cover commodity risk, which required amendment to the RTS.
Date of publication: 05/05/2025
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