Objectives of the session
The EU Commission presented at the end of October 2021 the Banking package intended to address various shortcomings identified. In particular, it is transposing in the EU limitations imposed by the BCBS of the ability of internal models to reduce regulatory capital in order to increase comparability of banks’ balance sheets. However, the package tries to pay attention to EU financing specificities and to avoid any significant increases in capital requirements. A transitional implementation period is notably intended to smooth the cost of the implementation.
Another priority for the EU Commission is to implement the market risk piece of the proposal consistently with other jurisdictions globally, notably to achieve an effective level playing field.
In this context the session will seek to discuss whether the proposed transposition combines a full and fair Basel III transposition, the preservation of an effective level playing field between all the banking groups operating in the EU as well as an appropriate level of financing of the EU economy, at a reasonable cost.
Questions to be addressed
- What are the actual benefits and impacts of the last Basel III package implementation in the EU, regarding comparability and risk sensitivity and the soundness of the EU banking sector?
- What are the possible impacts of the new prudential approach on risk behaviour of banks?