An important step has been taken for strengthening the stability and resilience of the European banking system by the EU’s 2019 Banking Package (also known as the Risk Reduction Measures package (RRM package)) and the subsequent amendments to the relevant Austrian laws. In May 2021, the Directives were transposed into Austrian law.
Contents of the RRM Package
The RRM package contains comprehensive amendments to the regulatory material in both banking supervision and bank resolution law (CRR , CRD IV , BRRD , SRMR ) and entered into force on 27.06.2019. The package’s objective is to further strengthen the resilience of the EU banking system and confidence in the markets as is intended to contribute towards the completion of the banking and capital markets union.
While the amendments to the CRR (CRR II) and those of the SRMR (SRMR II) have been in force and directly applicable since 28.06.2021 and 28.12.2020 respectively, the amendments to the CRD (CRD V ) and the BRRD (BRRD II ) had to be transposed into national law. The Austrian legislator transposed the Directives into Austrian law in the amendments published in the Federal Law Gazette (BGBl. I ) no. 98/2021, which was published on 28.05.2021.
The material content of the package includes, inter alia, the introduction of a binding leverage ratio(LR) as well as a binding structural liquidity ratio (Net Stable Funding Ratio, NSFR). Furthermore for the first time, Environmental, Social and Governance Risks (ESG risks) are covered in the banking supervision regulatory framework. Furthermore, the package also contains far-reaching amendments and additions with regard to banking resolution law. Moreover, the package also takes the principle of proportionality into consideration, and in this context defines simplified obligations for small and non-complex institutions (SNCIs).
Transposition of CRD V and BRRD II in Austria
The following significant points were newly addressed in the amendment published in the Federal Law Gazette (BGBl. I ) volume I no. 98/2021:
- Specification of Pillar II Requirements in banking supervision law (“Supervisory Review and Evaluation Process“ (SREP ))
- Adaptation of the legal framework for the capital conservation buffer, capital conservation measures and macro-prudential tools
- Increased cooperation between authorities in the combatting of money laundering and terrorist financing
- Granting of licences for financial holding companies and mixed financial holding companies
- Increasing the attractiveness of SME growth markets (special category of multilateral trading facilities (MTFs)) by reducing compliance costs etc.
- Adaptation of the calculation basis for the (TREA ) when prescribing MREL
- Adaptation of the rules regarding resolution planning, especially with regard to the Single Point of Entry (SPE) and the Multiple Point of Entry (MPE) approach.
- Introduction of a power to issue a moratorium for the time prior to a resolution of a bank.