Economic and Monetary Affairs Committee of the European Parliament adopts report on CRD IV

On 12^th June, the Economic and Monetary Affairs Committee (ECON) of the European Parliament adopted its report, prepared by the Rapporteur Othmar Karas (EPP, Austria) on the CRD IV (Capital Requirements Directive and regulation), which is to implement the Basel III accord into EU legislation.

The ECON has introduced a number of provisions that are intended to ensure sustained access to finance, whilst improving banking regulation and capital requirements. In this sense, it has voted on an amendment increasing the admissible amount for retail exposures to € 2 million, instead of the currently valid € 1 million ceiling (Article 118). This would allow for more retail loans to be included in retail portfolios, giving them the benefit of a better risk weight. The retail portfolio's risk weight of 75% in turn will be lowered for SME loans by applying a balancing factor of 0,7619, bringing the effective risk weight to about 57%. This is viewed by AECM  and other stakeholders (banking associations and SME organizations) as being an effective measure for ensuring continued SME access to finance under the new more severe prudential regulations.

Also, the ECON has adopted an amendment for which AECM had fought over the last months, ensuring that Guarantee institutions are recognized as providing credit risk protection under Article 197, thereby allowing for a better risk weight for guaranteed loans.

The report will now be submitted for a vote in the EP Plenary in Autumn and will be subject to the Trialogue between EP, Council and the Commission with a view of adopting a final text before the end of the year.

Link: http://www.europarl.europa.eu/committees/en/econ/reports.html