Univ.-Prof. Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.Under CRD IV, banks must maintain a capital conservation buffer consisting of Common Equity Tier 1 capital. Set at as much as 2.5% of risk-weighted exposures, this reserve is built up in ordinary times so that institutions have additional capacity to absorb losses during financial downturns.
The Bank Recovery and Resolution Directive (BRRD) is the EU rulebook for preparing banks and certain investment firms for financial distress and addressing failures when they occur. It requires firms and authorities to plan for potential problems and gives regulators tools to stabilize or wind down a failing institution while limiting disruption to the wider… read more »