The European Parliament’s three main political groups called for the introduction of an ‘output floor’ at consolidated level for banks using internal models to calculate their capital requirements, on Wednesday 31 August when amendments to the legislative package to finalise the transposition of the Basel III agreement on banking prudential requirements in the European Union were discussed.
The European Parliament rapporteur on the two legislative texts on the table, Jonás Fernández (S&D, Spanish) recalled that he was in favour of the gradual introduction of the threshold at the consolidated level of a group “exclusively” (see EUROPE 12971/17). In his view, it is not a question of protecting any particular national banking sector, but of complying with the Basel III agreement, which imposes additional capital requirements on banks using an internal model.
On behalf of the EPP group, Austrian Othmar Karas said that banks should not be asked to respond to the current crises by increasing their capital requirements excessively. He advocated the creation of the output floor “at the highest consolidated level” of a banking group.
Gilles Boyer (Renew Europe, French) followed suit, arguing that the ECB was also of this view. He noted that the dividing line in the amendments tabled on this issue is “more along country lines rather than political groups”. Not acting at the consolidated level would put European banks at a competitive disadvantage, he also argued.
On behalf of the Greens/EFA group, Finland’s Ville Niinistö called for the introduction of a capital floor for banks using an internal model “at all levels” of a group. Otherwise, there is a risk of “undercapitalising” some of the group’s entities, a situation that would undermine their stability.
No less than 1,700 amendments were tabled to the legislative package (1,200 on the regulation and 500 on the directive), said Luděk Niedermayer (EPP, Czech), who chaired the meeting. Negotiators from each political group will have to come to an agreement before the vote in the parliamentary committee, scheduled for Monday, 5 December.
Negotiations will also cover issues such as the extent of transitional measures to spread the impact of the introduction of the output floor, the consideration of environmental, social and governance (ESG) risks and the supervision of third country branches of banking groups operating in the EU.
See the amendments tabled to the draft ‘Fernández’ reports: https://aeur.eu/f/2vn (Original version in French by Mathieu Bion)