European Parliament approves reporting requirements for banks

April 29, 2013

On 16 April 2013, the European Parliament approved a 2011 European Commission proposal on the reporting requirements for banks. Details are summarized below.

Background

In July 2011, the European Commission launched a proposal on the capital requirements for banks (CRD IV package), which should replace the Capital Requirements Directives (2006/48 and 2006/49) applicable to banks.

The aim of the proposal is to strengthen the regulation of the EU banking sector, to bring it in line with the Basel III agreement, which the G20 approved in November 2010.

This agreement, inter alia (among other things), provided that banks should have a minimum capital of at least 7% of their risk-weighted assets.

Proposal

The Commission proposal consists of:

  • A directive on market access and prudential supervision
  • A regulation on prudential requirements for financial institutions.

In addition, the new directive provides for a cap on bonuses for bankers and a per-country reporting of tax payments made to governments by certain EU institutions.

This reporting will oblige the financial institutions concerned to disclose, on a consolidated basis, the annual payments made to governments. In addition, they have to list profits before tax, taxes on profits and the amount of subsidies received.

Effective date

It is expected that the proposal will be adopted in an upcoming Council of the Ministers for Economic and Financial Affairs (Ecofin) and will apply from 1 January 2014, if the directive and regulation are published in the Official Journal at the latest by 30 June 2013.

Otherwise, the effective date will become 1 July 2014.

The disclosure requirements for EU institutions would be effective from 1 January 2015.


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