The Capital Requirements Directive (CRD IV) (Directive 2013/36/EU) and the Capital Requirements Regulation (CRR) (Regulation (EU) No 575/2013) together form the EU’s core prudential framework for banks and investment firms, implementing key elements of the Basel III standards.
They set out rules on:
- Capital and liquidity requirements
- Risk governance and management
- Supervisory oversight and disclosure
The framework builds on earlier legislation, notably the Banking Directive (2000/12/EC) and the original Capital Requirements Directives (CRD I–III) adopted between 2006 and 2009, which began aligning EU rules with Basel II.
While primarily focused on banks, CRD IV / CRR also apply to investment firms, including those active in commodity markets, where relevant.
Latest Reform: CRD VI / CRR III (2024 Banking Package)
In June 2024, the EU adopted CRD VI and CRR III to implement the final components of Basel III, often referred to as Basel IV.
Key changes include:
- A binding output floor to reduce variability in risk-weighted assets calculated with internal models
- Updated capital rules for market risk, credit risk, and operational risk
- A new regulatory framework for third-country branches operating in the EU
Application timeline:
- CRR III applies from 1 January 2025
- CRD VI must be transposed by 10 January 2026, with key provisions applicable from 11 January 2026
Level 2 – Technical Standards and Single Rulebook
CRD IV and CRR are supported by delegated and implementing acts, developed by the European Commission and EBA, covering:
- Calculation of capital requirements
- Large exposures and liquidity ratios
- Reporting, disclosure, and supervisory coordination
These measures ensure harmonised implementation across the EU under the banking single rulebook.