European Central Bank Banking Supervision has updated its policies on how it applies the options and discretions available under EU banking rules, following a public consultation that closed on 24 January 2025, with the aim of a more harmonised supervisory approach across the banking union. The revisions reflect consideration of 210 comments from 13 banking associations and two banks and include clarifications and adjustments on permissions linked to how banks calculate capital requirements for operational and market risks, and on whether minority interests in subsidiaries can be included in a banking group’s capital. The updated policies also set out how the Danish Compromise should be applied in the banking union, specifying that banks risk-weighting investments in an insurance subsidiary should risk-weight all own funds instruments held in that subsidiary, not only core equity instruments, with a one-year transition period for all affected banks. A feedback statement summarising the consultation responses and the ECB’s assessment has been published, and the updated policies also reflect the CRR III-CRD VI package published in June 2024 and supervisory developments since the previous 2022 update.
European Central Bank - Banking Supervision 2025-07-25
European Central Bank Banking Supervision updates options and discretions policies and clarifies Danish Compromise treatment with one-year transition
The European Central Bank Banking Supervision revised its policies on options and discretions under EU banking rules to enhance supervisory harmonization. Updates include clarifications on capital requirement calculations for operational and market risks, and the Danish Compromise on risk-weighting investments in insurance subsidiaries. The revisions incorporate feedback from a public consultation and align with the CRR III-CRD VI package and recent supervisory developments.