Capital Requirements Directive

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The Capital Requirements Directive (CRD) for the financial services industry will introduce a supervisory framework in the EU which reflects the Basel II rules on capital measurement and capital standards.

Member States have to transpose, and firms of the financial service industry have to apply, the CRD from January 1 2007. Institutions can choose between the current Basic indicator approach, that increases the minimum capital requirement in Basel I approach from 8% to 15% and the Standardized Approach that evaluates the business lines as a medium sophistication approaches of the new framework. The most sophisticated approaches, Advanced IRB approach and AMA or advanced measurement approach for operational risk will be available on the beginning of 2008. From this date, all EU firms will apply "Basel II".

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