Association of German Banks: European Parliament's adoption of the revised Capital Requirements Directive (CRD) a major step towards strengthening the European financial system

07 May 2009 - The Association of German Banks welcomes the European Parliament's adoption of the revised Capital Requirements Directive (CRD). “The EU's swift response is a major step towards strengthening the European financial system,” Hans-Joachim Massenberg, Deputy Chief Executive of the Association, said. The amended CRD helped to make banks more resistant to future crises. Mr Massenberg particularly praised the new rules on securitisations: “They will ensure that only banks which have sufficient understanding and adequate risk management policies invest in securitised products.”

Mr Massenberg also welcomed the changes relating to large exposures as well as the new definition of capital. However, he took a critical view of limiting interbank exposures to 25% of own funds, as now introduced. “It remains to be seen how this restriction will affect the supply of liquidity between banks, particularly in tight market situations,” he said. A positive aspect, on the other hand, particularly for small and medium-sized banks, was the € 150 million threshold amount for interbank exposures.

The steps taken to improve cooperation between national supervisors by establishing ‘colleges of supervisors' for international, cross-border banking groups also went in the right direction. At the same time, Mr Massenberg found it regrettable that the original proposals made by the Commission to expand the powers of the responsible consolidating supervisor had been diluted in the further consultations with the European Parliament and the Council. “A strong consolidating supervisor is an important condition for improved, efficient supervision of international banking groups,” Mr Massenberg said.

The amended EU rules have to be transposed quickly into national law to allow their subsequent uniform application by all European banks. They are due to be applied for the first time on 31 December 2010.