Capital Requirements Directive IV: background and legislative history
Capital Requirements Directive IV: background and legislative history

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Capital Requirements Directive IV: background and legislative history
  • The origins—CRD I
  • CRD II
  • CRD III
  • CRD IV
  • CRD IV package: Basel III related reforms
  • CRD IV package: non-Basel III related reforms

This Practice Notice details the background and legislative history in relation to the CRD IV package, the latest package of major reforms to EU legislation on prudential requirements for credit institutions and investment firms. It charts the historical background and evolution from Basel I and the original Capital Requirements Directive framework through to the latest proposals known as the CRD IV package consisting of a directive (CRD IV) and the Capital Requirements Regulation (CRR).

The origins—CRD I

In 2000, the Banking Directive (Codification) Directive (Directive 2000/12/EC) replaced a range of seven banking related Directives (and associated amending Directives). The aim was to improve the clarity and transparency of EU legislation and to follow the Basel Accords adopted in 1988 (Basel I). In 2004, the Basel II guidelines were adopted by the Basel Committee on Banking Standards (Basel). Basel II was amended in 2005 and a consolidated version issued in 2006. These were implemented at EU level in 2006 through two directives:

  1. Banking Consolidation Directive (Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions) (BCD)

  2. Capital Adequacy Directive (Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions) (CAD)

Both