CRD IV

Bank supervision

CRD IV is the EU Capital Requirements Directive (CRD), 2013/36/EU, implementing Basel III in the European Union (EU).

It comprises prudential rules for financial institutions covering:

• Requirements on quality and quantity of capital;
• Rules for counterparty risk;
• A base for liquidity and leverage requirements; and
• Macroprudential standards.

The related rules and supervisory statements to implement CRD IV in the UK are set out in the Prudential Regulatory Authority (PRA)'s Policy Statement PS7/13.

The PRA's statement refers to the CRD and the related Capital Requirements Regulation (575/2013) as jointly comprising 'CRD IV'.

Loans raw material cost rises

"Under CRD IV, the amount of capital that banks must hold against credit risk is now 2-2.5 x higher than it was pre-crisis.

Given this increase in the raw material cost of manufacturing loans, lending has naturally become a more expensive process."

The Treasurer magazine, April 2017, p24 - Nick Burge, MD, head of strategic liquidity at Lloyds Bank.

See also

• AT1
• Bank supervision
• Basel II
• Basel III
• Capital
• Capital adequacy
• Capital Adequacy Directive
• Capital Requirements Directive
• Capital Requirements Regulation
• CET1
• Counterparty risk
• CRD V
• Credit risk
• Directive
• Fully loaded CRD IV
• Global Financial Crisis
• Leverage
• Liquidity
• Macroprudential
• Prudential Regulation Authority
• T2