EC consults on the treatment of equity exposures under legislative programmes

The European Commission has published a targeted consultation, accompanied by a press release, on a draft communication regarding the prudential treatment of equity investments by banks under legislative programmes in Article 133(5) of the Capital Requirements Regulation (CRR). These programmes, established under EU and national laws, aim to channel both public and private financing into strategic sectors of the economy. The draft communication proposes more favourable capital treatment for banks investing in equities through qualifying public programmes, typically involving public subsidies or guarantees and subject to oversight by public authorities. This means banks would be required to hold less capital against such investments compared to other equity exposures.

The guidance, set out in the Annex to the draft communication, forms part of the EU’s Strategy on the Savings and Investments Union. It aims to boost competition and mobilise private funding, particularly from institutional investors like banks or insurers, to support fast-growing companies and strategic sectors that often struggle to access debt markets. The guidance covers the scope, particularly the measures that would fall within the definition of “legislative programme” and the eligibility conditions of legislative programmes for the purposes of Article 133(5). There is also guidance on the monitoring and enforcement obligations for competent authorities to ensure that equity exposures benefitting from the treatment under Article 133(5) do not exceed 10% of the institutions' own funds. The EC will maintain a public register of legislative programmes. The deadline for responses on the consultation is 8 September, with a final communication expected in Q4 2025.

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