The Commission adopted its first 'equivalence' decision for the purposes of credit risk weighting under Regulation (EU) No 575/2013 ('Capital Requirements Regulation').
"With this Decision, we are clarifying the capital provisions that EU banks need to hold against over 90% of their non-EU lending. This means EU credit institutions won't need to apply disproportionate capital requirements against these exposures. This decision makes it easier for European banks who operate globally and strengthens the single banking market". said Commissioner Jonathan Hill.
The Implementing Decision determines that certain third countries and territories apply regulatory and supervisory arrangements that are equivalent to those applied in the Union, with respect to credit institutions, investment firms, and exchanges.
For those third countries which are recognised as equivalent, EU banks can apply preferential risk weights to relevant exposures to entities located in those countries. These include: financial institutions, central and local governments, and public sector entities.
Today's decision is the first step in an ongoing programme which will regularly review the equivalence of other third countries. This exercise will be carried out over the coming years with the assistance of the European Banking Authority.
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