ECOFIN

Council of EU Agrees on Approach to Legislative Proposals for Insolvency Hierarchy Directive and IFRS 9 Regulation

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The Council of the EU has agreed on a general approach to the legislative proposals for a directive (which will relate to the ranking of unsecured debt instruments in insolvency) amending the Bank Recovery and Resolution Directive (2014/59/EU) (“BRRD“) and a Regulation amending the Capital Requirements Regulation (Regulation 575/2013) (“CRR“) (which concerns transitional periods under the International Financial Reporting Standard 9 (“IFRS 9“)).

A press release published on June 16, 2017, by the Council of the EU (in its configuration as the Economic and Financial Affairs Council (ECOFIN)) outlined the following general approach on the legislative proposals:

  • In relation to BRRD, the Council agreed on the text set out in the Council’s final compromise proposal dated May 31, 2017 (9479/17).
  • In relation to CRR, the Council agreed on the text set out in the Council’s final compromise proposal dated May 31, 2017 (9480/17).
  • On June 12, 2017, the Council’s Permanent Representatives Committee recommended that the Council agree on these texts as their general approach.

The press release states that EU ministers have asked the Council Presidency to start talks with the European Parliament on these proposals as soon as the Parliament has approved its own negotiating stance. It quotes the finance minister of Malta (which currently holds the Council Presidency), stating that the Council hopes that “the Parliament will be able to start negotiating by the end of this year.”

The draft Insolvency Hierarchy Directive and the IFRS 9 Regulation form part of the package of banking reforms that were adopted by the European Commission in November 2016. The EU authorities have decided to fast-track these relatively discrete measures ahead of their consideration of the remainder of the reforms.

ECOFIN Discusses Banking Union, CRD IV and RRD

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On July 10, the European Economic and Financial Affairs Committee (“ECOFIN”) considered the progress and timings in relation to the work on the banking union, CRD IV and the proposed Recovery and Resolution Directive (“RRD”). The Council of the EU published a press release concerning the matters discussed at the meeting. Press Release.

The press release covers the following areas:

  • Banking Union: The President of the Council has been invited to assist with the development of a specific and time-bound work programme on the banking report.
  • CRD IV: At the meeting, it was explained that negotiations concerning the CRD IV Directive are almost finished, and attention has now turned to the Capital Requirements Regulation. There are several outstanding issues such as bankers’ remuneration, crisis sanctions and the powers to be given to the European Banking Authority.
  • RRD: The press release states that the Council aims to agree a general approach on the proposed RRD by December 2012.

ECOFIN Reaches Agreement on CRD IV

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On 15 May 2012, the Council of the EU announced that the Economic and Financial Affairs Council (“ECOFIN”) has reached agreement on the CRD IV proposals. CRD IV is a package of EU reforms on prudential requirements for credit institutions and investment firms intending address a number of issues arising from the financial crisis. The existing Capital Requirements Directive will be replaced with the CRD IV Directive and the Capital Requirements Regulation. The amendments agreed by ECOFIN were published on 17 May 2012 and are available here.