€18 billion is the amount invested by European banks in 2016, according to a study carried out by the European Banking Federation (EBF) of 108 European banks and published on Tuesday 31 October. This is a significant amount when banks are required to accept “prudential rules that require software investments to be treated as costs instead of an investment”, the organisation laments in a press release.
Readers may recall that in Europe, software in which banks invest is considered an intangible asset. This means that under the capital requirements regulation (CRR), banks must deduct their software investments from their principal capital ratio when calculating their capital requirements.
An end to deducting banks' software investments from their regulatory capital is a recurrent demand of the banking industry (see EUROPE 11851). It also has support from members of the European Parliament, for instance Cora van Nieuwenhuizen (Netherlands), shadow rapporteur of the ALDE group on the revision of the CRR regulation, who reiterated her support at the 'banking summit' hosted by the EBF in late September (see EUROPE 11872).
“This is not only a significant disincentive for investments, but also leads to unfair competition between major players as well as jurisdictions”, the organisation warned, calling on the co-legislators to take the opportunity of the revision of the CRR regulation to change the prudential requirements. (Original version in French by Marion Fontana)