AFME welcomes political agreement on EU implementation of final Basel III standards

AFME has welcomed the political agreement reached by the EP and the European Council on the implementation of the final Basel III standards in the EU. This agreement, encompassing the CRR3 and CRD6 proposal, signifies the completion of a rigorous regulatory program aimed at enhancing standards and constraints for credit institutions. AFME emphasizes the positive impact on strengthening banks‘ resilience and recognizes their vital role in financing the economy.
While supportive of the agreement’s aspects, AFME also voiced concerns about certain elements. Notably, the application of the Output Floor at the solo level of consolidation is deemed suboptimal, potentially leading to market fragmentation. AFME encourages decision-makers to resist further increases in capital requirements, highlighting the banking sector’s ongoing implementation phase and the need for capacity to finance the real economy during the digital and green transition.
In addition, AFME advocates for a comprehensive review of the capital treatment for the securitization framework, emphasizing the importance of ensuring effective use by all banks, irrespective of their model approach, to support the real economy. Despite welcoming positive developments, AFME notes some suboptimal outcomes for the European economy in certain areas of the agreement, urging flexibility in the implementation date, particularly for market risk standards, to maintain global consistency and competitiveness in the capital market.