CRD/CRR, German legislation

Because of its legal form, the Capital Requirements Directive of 26 June 2013 (CRD IV) had to be transposed into German law. The relevant legal provisions were adopted in the German Banking Act (KWG) and subsidiary regulations.

The provisions of the CRD IV, as well as the discretionary rights in the CRR, were transposed into national law, inter alia,

  • in the German Banking Act (KWG)
  • the German Solvency Regulation (Solvabilitätsverordnung, SolvV) and
  • the German Large Exposures Regulation (Großkredit- und Millionenkreditverordnung, GroMiKV).

For instance, the KWG contains capital requirements in addition to those in the CRR, as well as requirements concerning the capital conservation buffer, the countercyclical capital buffer, and the capital buffer for systemic risks and for global and other systemically important institutions (section 10 et seq. KWG in conjunction with the SolvV).

The discretionary right provided to Member States in Article 493 CRR to exempt certain exposures from the limit on large exposures was exercised in the GroMiKV. Thus, among other things, covered bonds like Pfandbriefe, as well as regional governments and local authorities that would be assigned a risk weight of 20% using the Standardised Approach for credit risk, were made exempt from limits to large exposures.

The KWG also established general risk management requirements, including a basic requirement concerning the institutions internal capital adequacy, which were then given greater detail through circulars issued by BaFin (Minimum Requirements for Risk Management (Mindestanforderungen an das Risikomanagement, MaRisk), Guideline on supervisory assessment of bank-internal capital adequacy concepts (Leitfaden zur aufsichtlichen Beurteilung bankinterner Risikotragfähigkeitskonzepte) (see also Supervisory practice). This also served to implement the Pillar 2 requirements of the Basel Capital Accord (see also Basel regulatory framework).