Training for the Risk Reduction Measures package (RRM) including CRD5/CRR2

The EU’s Risk Reduction Measures package (RRM), which includes the fifth Capital Requirements Directive (CRD5), the second Capital Requirements Regulation (CRR2) and the second Bank Recovery and Resolution Directive (BRRD2) was published on 7th June in the Official Journal of the European Union. This confirms the date of the file’s entry-into-force, which will be 27th June.

At that point, certain elements of the package will apply, most notably the TLAC requirements. However, it is important to note that the vast majority have application dates a number of years down the line, with the NSFR, SA-CCR, the Leverage Ratio and many other provisions having application dates 2 years after entry into force (27.06.2021).

It is also important to note that while the Fundamental Review of the Trading Book (FRTB) is included in CRR2, it will be a reporting requirement only. Once operationalised by the Commission in a Delegated Act due by the end of this year, it will apply as a reporting requirement for the Standardised Approach at end-2020, and for the Internal Model Approach at end-2022. The FRTB will most likely be included as a binding capital requirement in the next EU banking package (i.e. CRR3). We expect to see a legislative proposal for this tabled by the Commission in Q2 2020.

EBA have already begun to work on the considerable amount of Level 2 work that the package has mandated them to undertake. Over the next 5 years we will see 76 level 2 measures such as Regulatory Technical Standards and Implementing Technical Standards, with many focusing on clarifying the FRTB framework.

With implementation dates now finalised firms need to start planning and starting their own implementation of the package. The Deloitte team is ready to support and we are currently delivering free detailed training sessions on the Risk Reduction Measures package. If you would like to arrange training for your institution then please contact John Kernan at jkernan@deloitte.ie.