Capital requirements
CRR/CRDAlso called capital Requirements Regulation, capital Requirements Directive, CRR3 and CRD6
The Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD) are the EU laws that put the Basel standards into effect for banks and some investment firms. CRR sets directly applicable rules on capital, liquidity, leverage and reporting. CRD covers licensing, governance, supervision, pay and capital buffers, and is transposed into national law.
How it works
A bank calculates risk-weighted assets for credit, market and operational risk and holds Common Equity Tier 1 capital of at least 4.5% of them, plus buffers set under CRD. It reports these figures to its supervisor through COREP and FINREP templates and discloses them publicly under Pillar 3. Supervisors add bank-specific Pillar 2 requirements after their annual review.
The current package, CRR3 and CRD6, implements the final Basel III reforms. Most CRR3 rules have applied since 1 January 2025, including the output floor and revised credit risk approaches. The market risk rules known as FRTB have been postponed to 2027. CRD6 adds rules for third-country branches and ESG risks, changing data and reporting work across EU banks.
The rules
Sets directly applicable capital, liquidity, leverage, large exposure, reporting and disclosure requirements for banks.
EU credit institutionsCovers authorisation, governance, remuneration, supervisory review and capital buffers, transposed by each member state.
EU credit institutionsImplements the final Basel III reforms, including the output floor and revised credit and operational risk approaches.
EU credit institutionsMember states had to transpose rules on third-country branches, ESG risks, fit and proper assessments and supervisory powers by January 2026.
EU credit institutions and third-country branchesCommon questions
What is the difference between CRR and CRD?
CRR is a regulation, so it applies directly in every member state and holds the detailed capital, liquidity and reporting rules. CRD is a directive that each country transposes, covering licensing, governance, pay, buffers and supervisory powers.
What is the minimum capital ratio under CRR?
Under Article 92 of CRR, banks must hold Common Equity Tier 1 capital of at least 4.5%, Tier 1 capital of 6% and total capital of 8% of risk-weighted assets. Buffers and Pillar 2 requirements sit on top.
What are CRR3 and CRD6?
CRR3 and CRD6 are the 2024 amendments that implement the final Basel III standards in the EU. Most CRR3 rules have applied since 1 January 2025, with transitional arrangements for the output floor running into the next decade.
