How national implementation will create CRD IV uncertainty

Author: Gemma Varriale | Published: 13 Feb 2012

Requirements that capital conservation and counter cyclicality buffers be implemented by national laws will create additional uncertainty for banks already facing a huge workload to implement Basel III and CRD 4 (the Capital Requirements Directive) on time.

Because the provisions are set out in a directive, Member State rules will have to be relied on to bring them into force, according to speakers at IFLR’s Structured Products and Derivatives Forum on February 9.

"For multinational institutions that creates complications of its own," said James Warbey of Milbank. "The UK might say we’re in a boom, we need a 2.5 % counter cyclicality buffer. But Germany might say we’re not in a boom, we’ve got a 0% counter cyclical buffer."

This means banks will need to work out what proportion...