Issue Brief: Capital Requirements Directive (CRD) IV

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4 pages
Source: CFA Institute
Claire Fargeot Graziella Marras Jim Allen, CFA

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Summary

The European Parliament approved the Capital Requirements Directive (CRD) IV package on 16 April 2013. The overarching goal of the new rules is to strengthen the resilience of the EU banking sector so that it is better placed to absorb economic shocks, whilst at the same time ensuring that banks continue to finance economic activity and growth. The purpose of CRD IV is to implement the Basel III capital accords, including specifically how much and in what form capital must be maintained. European banks have been opposed to the incorporation of a leverage ratio as well as the variable remuneration cap. However it is vitally important that banks and SIFIs meet global minimum capital requirements and a leverage ratio requirement, such as the 3% ratio required by Basel III.

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