CRR Regulation (EU) 575/2013

The CRR was deliberately enacted as an EU regulation rather than a directive to create a single rulebook for all EU credit institutions. As a regulation under Article 288 TFEU, it is directly applicable in every member state without requiring transposition into national law. This prevents regulatory arbitrage — institutions exploiting differences in national implementations to gain competitive advantages.

The CRR (Regulation 575/2013) establishes prudential requirements for credit institutions and investment firms across six core areas: own funds requirements (Articles 25‑91), credit risk (Articles 107 ff.), large exposures (Articles 387 ff.), liquidity requirements (Articles 411 ff.), leverage ratio (Articles 429 ff.) and Pillar III disclosure obligations (Articles 431 ff.). It transposes the international Basel III standards into European law.

CRR II entered into force on 28 June 2021 and introduced significant changes: a binding leverage ratio of at least 3%, the Net Stable Funding Ratio (NSFR) as a long-term liquidity metric, revised counterparty credit risk rules (SA-CCR), new MREL/TLAC requirements for eligible liabilities, and simplified rules for small and non-complex institutions.

CRR III finalises the Basel III implementation in the EU and has applied since 1 January 2025. Key changes include the output floor (lower bound for internal models), revised standardised approaches for credit and market risk (FRTB), new rules for operational risk, prudential treatment of crypto-assets, and enhanced ESG disclosure requirements. The output floor will be phased in gradually reaching 72.5% by 2030.

The CRR applies as a regulation directly in all 27 EU member states — banks must comply without national implementing legislation. The CRD, by contrast, is a directive that each member state must transpose into national law (in Germany via the KWG and SolvV). This dual approach combines harmonised quantitative requirements (CRR) with national discretion on governance and supervision (CRD).

The CRR implements the Basel III three-pillar model: Pillar I defines binding minimum requirements for own funds, liquidity and leverage (quantitative requirements, regulated directly in the CRR). Pillar II covers the supervisory review process (SREP), partly regulated through the CRD. Pillar III requires institutions to publicly disclose risk and capital metrics (Articles 431‑455 CRR) to promote market discipline.

ADVISORI accompanies credit institutions in fully implementing all CRR requirements: from own funds calculation (CET1, AT1, T2) through credit risk modelling (IRB approach, PD/LGD/EaD) and liquidity management (LCR/NSFR) to Pillar III disclosure. Our consultants support CRR III transition, output floor calculations, FRTB implementation and regulatory communication with BaFin and ECB.