Are we disposed for Basel compliance?
The new rules have already lead to geographical retrenchment, deleveraging and a refocusing of the businesses models of many financial institutions. At the Copenhagen Compliance Conference in September, we will have a parallel session on the various financial services Regulatory Compliance issues and try to shed light on The EU Banking Union by discussing the regulatory financial landscape and how it will look like in a post-Basel III EU banking Union territory.
In 2012, the European Commission adopted another plan to further strengthen the regulation of the banking sector.
Basel III as we now know is the comprehensive set of regulatory reform measures, developed by the Basel Committee on Banking Supervision. In the aftermath of the financial crisis, the EU commission is rather keen to improve the banking sector's resilience to financial and economic stress.
Oversight authorities believe that to improve risk management and governance and strengthen banks' transparency more regulation ios mandatory. On a European level, the Capital Requirements Directives have been progressively updated through the CRD II package of 2009 and the CRD III package of November 2010.
The EU proposals, commonly referred to as CRD IV, are intended to replace the current Capital Requirements Directives with a Directive and a Regulation. Among other things the Directive will govern the access to deposit-taking activities while the Regulation will establish the prudential requirements institutions need to follow.
Moving toward the end of the first half of 2013, Basel III seems to be a "done deal". Whilst CRD IV is yet to be approved in its final form by the European Parliament, the end dates are set and by now most institutions have completed building new risk models to meet the new capital and liquidity requirements. However, it is not so much the models per se, but the implications and consequences for financial institutions and markets that matter.
