The finance ministers of European Union (EU) member countries are expected to agree to give banks six years more times to slash their holding in EU insurance firms.
Citing a draft of the EU banking package, Reuters reported that the amendment to Europe’s Capital Requirements Regulations (CRR) would extend the deadline for the deductions to 31 December 2024 from 2018-end.
The CRR regulation mandates banks to set aside enough capital to cover unexpected losses and keep them solvent in case a financial crisis strikes.
In order to avoid the repeat of financial crisis, which badly affected the finances of almost all countries, the European authorities have been focusing on standardizing definitions of capital and increasing capital demands on banks.
However, some governments and national lobbying groups have been bargaining and pressurising the EU authorities to extend the deadline for the implementation of the CRR regulation.
An amendment in CRR will give reprieve to Italian financial services firm Mediobanca as the company needs to immediately offload its 13% stake in insurer Generali .
So far, Mediobanca has not decided to use the current exemption, commonly known as “Danish compromise”. The company is cutting 80% of its stake in Generali. Mediobanca plans to fully dilute its stake in Generali by the end of this year.