Source: https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Financial_institutions/Brexit_and_Basel_III_an_invitation_for_more_or_for_less
Timestamp: 2019-06-27 01:59:06
Document Index: 355956249

Matched Legal Cases: ['Art 94', 'Art 129', 'Arts 141', 'Arts 135', 'Art 130', 'Arts 111', 'Art 102', 'Art 106', '§ 3105']

Brexit and Basel III: an invitation for more or for less?- Publications - Eversheds Sutherland
adding further detail to the requirements of the conservation plan banks need to submit within five working days of becoming aware of any failure to meet the capital conservation buffer.10
Counter-cyclical buffers
The counter-cyclical buffer is an additional requirement to the capital conservation buffer, and is designed to create, at both the national and bank-specific level, capital buffers during times of excess credit growth which banks can then use to absorb losses in any ensuing economic downturn. CRD IV provides for the European Systemic Risk Board to provide additional guidance regarding the factors which EU member states may take into account when determining the national buffer, for example as regards the ratio of credit to gross domestic product and any specific risks to financial stability, and the UK authorities could no longer be subject to this guidance.11
Content requirements for countercyclical buffers
In particular, CRD IV requires the counter-cyclical buffer to consist of only common equity, whereas Basel III is more flexible in allowing other fully loss absorbing capital to be used. In the UK, these requirements could be loosened to enable banks to more easily meet their buffer requirements.12
The UK authorities may no longer be subject to the EU consolidated supervision rules, which state that each competent authority is required to do everything within its power to reach a joint decision with the other competent authorities as regards European Union banking groups, on issues such as the required level of own funds to be maintained, and the rules relating to liquidity. Disputes on these issues under CRD may be referred to the European Banking Authority (EBA) whose decision is binding.13
Risk-weighted assessment (RWA)
1 See, for example, Molostova, 'Revision of European regulatory capital regime' (2009) 1 JIBFL 20. "Basel III" is the shorthand term for the set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector with the aim of: (i) improving the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source; (ii) improving risk management and governance; and (iii) strengthening banks' transparency and disclosures (see the description on the Bank of International Settlements website). For discussion generally see Simon Gleeson International Regulation of Banking (2nd Ed).
2 These are discussed further below.
3 CRR, Art 94.1(g).
4 See Gleeson Ioc cit, p 45.
5 Osborne gives up on challenge to bank bonus cap (Financial Times)
6 See Basel Committee on Banking Supervision: Basel III: a global regulatory framework for more resilient banks and banking systems (June 2011); Pt 1: Minimum capital requirements and buffers; CRR Part Two Title I.
7 Basel Committee on Banking Supervision: Regulatory Consistency Assessment Programme; Assessment of Basel III Regulations -- European Union (December 2014), p 26-31.
8 Letter from Simeon Djankov, Minister for Fin, Bulg. et al. to Michel Barnier, Comm'r for Internal Mkt & Servs, Eur Comm'n & Olli Rehn, Comm'r for Econ & Monetary Affairs, Eur Comm'n (19 May 2011)
9 Basel III: A global regulatory framework for more resilient banks and banking systems (September 2010; Rev June 2011), p 54-57; CRD IV Directive Art 129.
10 Basel III: A global regulatory framework for more resilient banks and banking systems CRD IV Directive Arts 141, 142 (December 2010 (rev June 2011)).
11 Basel Committee on Banking Supervision: Guidance for national authorities operating the countercyclical capital buffer (December 2010); CRD IV Directive Arts 135, 136.
12 Basel III: A global regulatory framework for more resilient banks and banking systems (December 2010 (rev June 2011)); CRD IV Directive Art 130.
13 CRD IV Directive Arts 111 to 118.
14 Basel Committee on Banking Supervision: Regulatory Consistency Assessment Programme; Assessment of Basel III Regulations -- European Union (December 2014), p 34.
15 CRR. Art 102-106 (particularly Art 106).
16 Basel Committee on Banking Supervision: Regulatory Consistency Assessment Programme; Assessment of Basel III Regulations -- European Union (December 2014), p 55.
17 Letter from Phillip Monks, CEO Aldermore Bank; Ian Lonergan, CEO Charter Savings Bank; Graeme Hartop, CEO Hampden and Co; Craig Donaldson, CEO Metro Bank; Andy Golding, CEO OneSavings Bank; Paul Lynam, CEO Secure Trust Bank; Steve Pateman, CEO Shawbrook Bank Limited to The Rt Hon Andrew Tyrie MP (30 June 2016)
18 12 U.S.C. § 3105(d)(2)(A) (2012) generally requires a finding by the US Federal Reserve that the foreign bank is 'subject to comprehensive supervision or regulation on a consolidated basis' by its home country. This assessment is facilitated if the bank can show that it a Basel III compliant jurisdiction.
19 EU Bank Capital Requirements Regulation and Directive
20 Letter from Simeon Djankov, Minister for Fin, Bulg et al to Michel Barnier, Comm'r for Internal Mkt & Servs, Eur Comm'n & Olli Rehn, Comm'r for Econ & Monetary Affairs, Eur Comm'n (19 May 2011)
21 Basel Committee on Banking Supervision: Regulatory Consistency Assessment Programme; Assessment of Basel III Regulations -- European Union (December 2014), p 29-30.
22 See, for example, the EBA questionnaire on regulatory equivalence