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Irish among 1st to put Basle III in law

Monday, March 31 17:05:49

A set of EU Directives designed to transpose the Basel III agreement on the regulation of banks and the shoring up of their capital buffers were today signed in to Irish law, making this country among the first to do so.

The Minister for Finance, Michael Noonan signed into Irish law two regulations to give effect to the Capital Requirements Directive IV (CRD IV). The European Union (Capital Requirements) Regulations 2014, gives effect to the Capital Requirements Directive (Directive 2013/36/EU) and the European Union (Capital Requirements) (No. 2) Regulations 2014, gives effect to a number of technical requirements in order that the Capital Requirements Regulation can operate effectively in Irish law.

"This is a vital piece of financial services legislation which aims to strengthen the effectiveness of the regulation of credit institutions and investment firms in the EU and enhance financial stability across the EU," finance Minister Noonan said.

The Capital Requirements Package, made up of Directive 2013/36/EU and Regulation 575/2013, aims to strengthen the resilience of credit institutions across the EU. The legislation was published on 27 June 2013 in the Official Journal of the EU following the successful negotiation under the Irish Presidency of the Council of the EU. The proposal was first published by the European Commission in July 2011.

CRD IV is one of the largest pieces of financial services legislation published and it had a truncated transposition deadline of six months after it was published in the Official Journal. The Directive has 165 Articles and the Regulation has 521 Articles. These deal with a diverse range of topics including Authorisations, Liquidity requirements, remuneration provisions and capital requirements. Ireland is amongst the first wave of Member States to complete the transposition of the Capital Requirements Directive and Regulation.

The Capital Requirements Regulation 575/2013 and Directive 2013/36/EU form the package known as CRD IV. The proposals under this package are the EU's answer to transposing the Basel III agreement reached by the Basel Committee on Banking Supervision in December 2010 which was endorsed by the G20 leaders.

This legislative package aims to strengthen the effectiveness of the regulation of credit institutions and investment firms in the EU and enhance financial stability. It is a vital piece of financial services legislation. A further objective is to contain the pro-cyclicality of the financial system which in turn will ensure a high level of protection for investors and depositors and will benefit of the operators in these markets.

Basel III is part of the continuous effort made by the Basel Committee on Banking Supervision to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents, and seeks to improve the banking sector's ability to deal with financial and economic stress, improve risk management and strengthen the banks' transparency. A focus of Basel III is to foster greater resilience at the individual bank level in order to reduce the risk of system wide shocks.