Navigating the landscape of regulatory changes

The global financial crisis of 2008-2009 served as a catalyst for a comprehensive overhaul of banking regulations. The Basel III reforms, developed by the Basel Committee on Banking Supervision (BCBS), laid the groundwork for the amendments encapsulated in CRR III and CRD VI, aiming to enhance the stability of the financial system on a global scale.

The new amendments, which were published in the Official Journal of the European Union on 19 June 2024 and will take effect on the twentieth day after publication, introduce several key changes. These include updates to the methodology for calculating credit risk, a new approach for operational risk, and the establishment of an output floor to standardise risk assessments across the EU banking sector.

As the banking sector prepares for the implementation of CRR III and CRD VI, it also faces a series of additional challenges and developments driven by Competent Authority and Supervisory initiatives. The cyber risk stress test in 2024, and the top-down climate risk stress test planned by the ECB, are both indicative of the proactive measures being taken to ensure the sector's preparedness for future risks.

The CRR III and CRD VI amendments mark a significant step forward in the EU's regulatory response to the financial crisis, emphasising the importance of resilience, sustainability, and global alignment.

As the banking industry embarks on this regulatory journey, it is imperative to maintain a collaborative approach, leveraging the collective expertise and experience of all stakeholders to ensure a smooth and successful transition.