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The
European Parliament's economic affairs committee is due to vote
on cross-party compromises, seen by Reuters, on a draft law
which implements remaining elements of Basel III, a global
accord which forces banks to hold more capital to cope with
market shocks unaided by taxpayers.
One amendment states that banks would have to apply a
risk-weighting of 1,250% of capital to cryptoassets exposures,
meaning enough to cover a complete loss in their value.
This is in line with recommendations from the global Basel
Committee of banking regulators in December.
The amendments also introduce a definition of "shadow banking",
the vast sector of insurers, hedge funds and investment funds
that make up about half the world's financial system and
typically less regulated than banks.
The amendment requires the EU's executive European Commission to
publish a report by June 2023 analysing the possibility of
introducing prudential limits on banks' exposures to shadow
banks.
Amendments also require renumeration policies at banks should be
aligned with their transition plans to address environmental,
social and governance (ESG) risks over the short, medium and
long term.
The draft law introduces a new "fit and proper" regime for
appointing bankers, with amendments saying there should be
targets for a bank's management body.
They should be "sufficiently diverse as regards age, gender, and
geographical and educational background" according to a report
from Jonas Fernandez, the committee member leading the
negotiations on the draft law in parliament.
The amendments generally go further than changes made by EU
states, who reached a deal among themselves in December and
which generally focused on temporary carve-outs on some of the
requirements to give banks more time to adapt, in the teeth of
European Central Bank opposition.
After Tuesday's vote the lawmakers and EU states will thrash out
a final deal which would come into effect in 2025.
(Reporting by Huw Jones, Editing by Louise Heavens)
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