The European Parliament and the Council reached a political agreement on capital requirements for banks

The Irish Presidency of the Council confirmed that on the 27 February, it reached a breakthrough in talks with the European Parliament on an overhaul of banking rules increasing EU financial stability. According to the Irish Presidency, the provisional deal includes restrictions on bankers pay to make sure that pay practices do not lead to excessive risk-taking. It also includes new provisions to making European banks more transparent.

A political agreement on capital requirements for banks was reached by the Irish Presidency and negotiators from the European Parliament on 27 February. Michael Noonan, Irish Minister for Finance stressed that the new rules will help make sure that European banks hold enough good quality capital to withstand future economic and financial shocks. European Parliament President Martin Schulz welcomed the draft agreement and underlined that the new rules will make the banking system safer, more stable and transparent. He added that they will help to avert the risk of a repeat of the disastrous financial crisis that hit the global economy in 2008, throwing millions into poverty and unemployment. The Council reached a general approach on bank capital rules with a view to negotiations with the European Parliament on May 2012.

The Irish Presidency highlighted that this overhaul of EU banking rules will make sure that banks in the future have enough capital, both in terms of quality and quantity, to withstand shocks. This will ensure that taxpayers across Europe are protected into the future. Moreover, the provisional deal reached with the European Parliament also includes limits on the size of bankers bonuses.

The Irish Presidency also confirmed that the package introduces capital buffers on top of the minimum capital requirements. These standards have been agreed at G20 level in what is known as the Basel III agreement. The new EU rules are set out in a Regulation and a Directive, making up the Capital Requirements package.