CRR3 is Regulation (EU) 2024/1623, the amendment to the Capital Requirements Regulation that implements the final Basel III reforms in the EU. It revises the standardised approach for credit risk, limits internal models, introduces the output floor and replaces the operational risk approaches, mostly applying from 1 January 2025.
CRR (Capital Requirements Regulation)The Capital Requirements Regulation, Regulation (EU) No 575/2013, sets the directly applicable EU rules on own funds, capital requirements, liquidity, leverage, large exposures, reporting and disclosure for banks and investment firms. It applies the Basel standards across the single market.
CRD6CRD6 is Directive (EU) 2024/1619, the amendment to the Capital Requirements Directive. It covers supervisory powers, fit and proper assessments, ESG risk management and a new regime for third-country branches. Member States transpose it into national law, mostly by January 2026.
Output floorThe output floor limits how far internal models can lower capital requirements: total risk-weighted assets cannot fall below 72.5% of the amount calculated with standardised approaches. In the EU it is phased in under CRR3 from 50% in 2025 to 72.5% in 2030.
Basel IIIBasel III is the global framework of the Basel Committee on Banking Supervision, agreed from 2010 and finalised in 2017, that raised the quality and quantity of bank capital and introduced the leverage ratio, the LCR and the NSFR. The EU applies it through the CRR and the CRD.
Basel IIIBasel III is the global framework of the Basel Committee on Banking Supervision, agreed from 2010 and finalised in 2017, that raised the quality and quantity of bank capital and introduced the leverage ratio, the LCR and the NSFR. The EU applies it through the CRR and the CRD.
Standardised approach for credit riskThe standardised approach sets credit risk weights by exposure class, using external ratings or prescribed values: for example 100% for unrated corporates and lower weights for residential mortgages by loan-to-value. CRR3 makes it more risk-sensitive, and it also feeds the output floor.
Output floorThe output floor limits how far internal models can lower capital requirements: total risk-weighted assets cannot fall below 72.5% of the amount calculated with standardised approaches. In the EU it is phased in under CRR3 from 50% in 2025 to 72.5% in 2030.
Operational riskOperational risk is the risk of loss from inadequate or failed internal processes, people and systems, or from external events. It includes legal risk and excludes strategic and reputational risk. Examples are fraud, processing errors, cyber incidents and outages.