Brussels, 3 February 2022 – Today, the China Chamber of Commerce to the EU (CCCEU) provided its feedback to the European Commission’s proposal for revision of Regulation (EU) No. 575/2013 (Capital Requirements Regulation, or CRR) and Directive 2013/36/EU (Capital Requirements Directive, or CRD), known together as the CRD6/CRR3 package.

In 2013, the Capital Requirements Regulation and the revised Capital Requirements Directive introduced a single rulebook for prudential requirements applicable to banks and financial institutions in the EU. The 2016 banking reform package, which created the CRD5 and CRR2 framework, was intended to finish the implementation of Basel III in the EU, but some key aspects were left for later. With the CRD6/CRR3 package, presented on 27 October 2021, the European Commission aims to finalise the rules of Basel III, including the implementation of the international regulatory standards agreed within the Basel Committee on Banking Supervision (BCBS) in December 2017.

The CCCEU highly appreciates and supports the European Commission’s efforts to strengthen banks’ resilience and enhance financial stability through the CRD6/CRR3 package, in the belief that this will also ensure the EU’s objective of continued and adequate financing for the its economy.

However, after carefully listening to the voices of our members and of other Chinese companies active in the EU, we provided our feedback to the Commission while highlighting that the package should be carefully calibrated, designed and implemented in a way that does not, unintentionally, constrain banks’ ability to support the EU’s economy.

On the one side, we believe that the EU institutions must ensure the new rules’ consistency with the international regulatory framework. On the other side, we see that the new requirements may have adverse effects on the economic and financial activities of banks and financial operators, both in the EU and in third countries.

“The proposed reforms to the EU banking rules raise some concerns among our members in relation to the treatment of third-country branches (TCBs)”, said Mr. Xu Haifeng, Chairman of the CCCEU. “In our feedback, we argue that TCBs bring tangible benefits to the EU’s economy and have limited impact on the EU’s financial stability. For this reason, we also suggest that the rules in the new package should take these elements into account, and they should avoid creating a burden for TCBs in the EU.”

As a matter of fact, if the new EU banking rules create a burden for TCBs in the EU and continuously rise their operating costs, this will in turn undermine the attractiveness of investing in the EU’s financial industry for foreign banks and financial operators.

Our full and detailed position, in which we elaborate on all the issues at stake with regard to the CRD6/CRR3 package, is publicly available on the relevant page of the European Commission’s website. We hope that these views can be beneficial for the discussion around the revision of EU banking rules, and for sound and considerate policymaking on the side of the EU institutions.