EBA Roadmap on the EU Banking Package:
The Output Floor

On 27 October 2021, the European Commission (EC) published its legislative proposal for the ‘EU Banking Package 2021’(CRR3/CRD6). After almost two years of review, amendments and negotiations among the EU co-legislators, CRR3 and CRD6 were finally adopted and published in the Official Journal of the EU on 19 June 2024.

The implementation of the CRR3 introduces a pivotal regulatory measure known as the Output Floor which sets a minimum threshold for the capital requirements calculated using banks’ internal models based on the Risk Weighted Assets (RWA) figure calculated via the standardized approach.

In order to mitigate its effects on banks’ RWA, this regulatory floor is phased-in gradually over a five- year period, with full implementation expected by January 2030.

In general, the final texts confirm the anticipated implementation date of January 1, 2025. However, the European Commission has postponed the application date of the “Fundamental Review of the Trading Book” (FRTB) enforcement by one year, now set to take effect on January 1, 2026. This will, in turn, have consequences on the application of the Output Floor.