|Title:||Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions
Note: this Directive is commonly referred to as the Capital Requirements Directive in conjunction with Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (both of which were published simultaneously).
|Topic:||Financial stability of credit institutions|
|Direct / indirect relevance||Indirect. A large part of the text focuses on financial RM/RA practices, which implies an obligation to implement appropriate RM/RA measures with regard to network/information security.|
|Scope:||Directly applicable to all EU Member States|
|Legal force:||EU Directive, requires transposition into national law|
|Affected sectors:||Credit institutions|
|Relevant provision(s):||A large part of the 200 page Directive is directly related to RM/RA for European credit institutions. Of specific interest is Title V of the Directive, related to principles and technical instruments for prudential supervision and disclosure.
This Title covers five specific chapters, including:
• Principles of prudential supervision, including provisions with regard to professional secrecy and responsibility for the legal control of annual and consolidated accounts
• Technical instruments of prudential supervision, including an obligation to maintain provisions against risks and minimum own fund levels to cover credit risk and operational risk
• Credit institutions’ assessment processes
• Supervision and disclosure by competent authorities
• Disclosure by credit institutions
|Relevance to RM/RA:||The scope of the provisions of the Directive reflects the supervisory rules introduced by Basel II, and provides a European perspective on requirements for the stability of credit institutions.
In addition to the general subjects indicated above, the Annexes to the Directive contain more specific guidance on how the relevant risks should be managed, including through:
• Annex III – The treatment of counterparty credit risk of derivative instruments, repurchase transactions, securities or commodities lending or borrowing transactions, long settlement transactions and margin lending transactions
• Annex V – Technical criteria concerning the organisation and treatment of risks
• Annex VI – Standardised approach on risk weights
• Annex VII – Internal Ratings Based (IRB) approach
• Annex VIII – Credit Risk Mitigation
• Annex IX – Securisation
• Annex X – Operational Risk