CRD VI / CRR III – EU Banking Package 2024 (Basel III Finalisation)

The EU Banking Package 2024 — comprising CRR III (Regulation (EU) 2024/1623) and CRD VI (Directive (EU) 2024/1619), published on 19 June 2024 — implements the final 2017 Basel III reforms (the “Basel III endgame”) in the EU and amends the existing CRR/CRD framework. It is the third generation of the EU own-funds regime after CRD IV/CRR (2013) and CRD V/CRR II (2019).

CRR III, as a directly applicable regulation, governs the quantitative reforms: the output floor (a 72.5 % floor of the standardised approach for internal models), revised standardised approaches for credit, market (FRTB) and operational risk (a new SMA), and the treatment of CVA and crypto-asset risks.

CRD VI, as a directive to be transposed, strengthens qualitative supervision: a harmonised framework for third-country branches, tightened governance and fit-&-proper requirements, integration of ESG risks into the supervisory review process (SREP), and enhanced supervisory powers and sanctions.

The Basel Committee on Banking Supervision finalised the Basel III reforms in December 2017 (often called the “Basel III endgame” or “Basel IV”). To implement them in the EU, the European Commission presented the 2021 banking package, with the CRR III and CRD VI proposals, on 27 October 2021.

Following the trilogue negotiations, both acts were published in the EU Official Journal on 19 June 2024: CRR III (Regulation (EU) 2024/1623) and CRD VI (Directive (EU) 2024/1619 of 31 May 2024). CRR III entered into force on 9 July 2024 and largely applies from 1 January 2025; CRD VI must be transposed into national law by 10 January 2026, from which date most of the directive’s rules apply. The FRTB market-risk requirements were first postponed to 2026 and, by Commission Delegated Regulation (EU) 2025/1496 of 12 June 2025, further postponed to 1 January 2027 to preserve an international level playing field.

The package applies to credit institutions and certain financial undertakings in the EU and widens the scope compared with CRD IV/CRR:

• EU credit institutions: All authorised banks, at individual and consolidated level
• Third-country branches (new – CRD VI): First-time harmonised minimum requirements for branches of non-EU banks (authorisation, capital endowment, liquidity, governance, reporting)
• Large, internationally active banks: Most affected by the output floor and the FRTB
• Proportionality: Relief for small and non-complex institutions (SNCIs), including on ESG disclosure

• Output floor (CRR III): Risk-weighted assets from internal models may not fall below 72.5 % of the standardised approach; phase-in: 50 % (2025), 55 % (2026), 60 % (2027), 65 % (2028), 70 % (2029), 72.5 % from 2030
• Credit risk (CRR III): Revised standardised approach and constraints on internal models (IRB) with more granular risk weighting
• Market risk / FRTB (CRR III): Fundamental Review of the Trading Book as a binding own-funds requirement from 1 January 2027 (postponed by Delegated Regulation (EU) 2025/1496)
• Operational risk (CRR III): New standardised measurement approach (SMA) based on the Business Indicator replaces all previous approaches
• CVA and crypto risks (CRR III): Revised CVA requirements and (transitional) treatment of crypto-asset exposures
• Third-country branches (CRD VI): Harmonised authorisation and supervisory framework; certain core banking services to EU clients only via an authorised branch or subsidiary
• ESG risks (CRD VI): Institutions must identify, measure and manage ESG risks and maintain plans to address transition risks; supervision of ESG risks within the SREP
• Governance & fit & proper (CRD VI): Tightened suitability assessment of management bodies and key function holders, diversity requirements, and enhanced supervisory powers and sanctions