Almost one year ago, on Oct 27 2021, the European Commission published its legislative package related to implementing the Basel III reforms, also known as Basel IV. In the past months, a lot of stakeholders shared their concerns about the draft proposal. Most concerns are the underestimation of the risks in some exposure classes (mostly linked to real estate exposures and unrated corporate exposures ) and the fact that the European rules would deviate too much from the original Basel III standards and thus hamper the equal level playing field for financial institutions.
The latest draft report of the ECON Committee with amendments to the initially drafted regulation* tackles already some of these concerns and was published in Augustus 2022.
This draft report will now be discussed and transformed into a legislative report on the CRR III and CRD VI proposals in the upcoming weeks.
Following the adoption of the report in the ECON Committee, the rapporteurs need to obtain a mandate from the European Parliament to engage in trialogue negotiations with the Council, which is working on its own position on the legislative proposals in parallel.
A final compromise between the European Parliament and the Council on the text of the CRR III and CRD VI is not expected until just before the end of 2022 or the beginning of 2023.
This implies that there are less than 24 months left between the publication of the final text and the effective application date, currently set on the 1st of January 2025.
To facilitate your Basel IV journey, we have prepared a Basel IV checklist for you: