First submission of Regulatory Reporting under CRR3: Timeline and challenges

At a glance

CRR3, effective since January 2025, introduces significant adjustments for banks across credit risk, market risk, operational risk and beyond. The introduction of these changes also impacts the regulatory reporting, as banks must adapt to revised methodologies, address increased data requirements, and adjust their reporting production processes.

With the 30 June 2025 deadline for solvency and leverage ratios reporting fast approaching, swift actions are crucial to prevent and anticipate compliance gaps caused by inadequate data management, incorrect interpretation of emerging regulatory rules and treatments, and unreadiness of reporting mechanisms (including reporting software) to satisfy the new CRR3 requirements.

A closer look

On 19 June 2024, Regulation (EU) 2024/1623 amending Regulation (EU) No 575/20131 (the Capital Requirements Regulation (CRR 3)) and Directive (EU) 2024/1619 amending Directive 2013/36/EU (the Capital Requirements Directive (CRD6)) were published in the Official Journal of the European Union.

The banking package implements a number of innovations in the prudential framework of credit institutions. It first includes the final elements of the framework set up in the Basel III accord, ensuring international level playing field while taking into account the specific features of the EU's banking sector. It also contributes to the green transition including new rules requiring banks to systematically identify, disclose and manage risks arising from environmental, social and governance factors (ESG) as part of their risk management framework. The banking package also provides stronger enforcement tools for supervisors overseeing EU banks, aiming at ensuring their sound management and, ultimately, protecting financial stability.
 

Some of the key changes brought by CRR3 relate to, among others:

• Credit risk (standardized approach) – The CRR3 introduces new exposure classes (e.g. subordinated debt exposures), revises the scope of existing exposure classes (e.g. equity exposures) and requires a more granular approach to the treatment of different credit risk exposures such as exposures to institutions (rated and non-rated), retail exposures (e.g. transactor exposure, currency mismatches), exposures secured by real estate (e.g. ADC, IPRE), among others.
• Credit risk (internal approaches) – The CRR3 reduces the scope of application of the internal ratings based (IRB) approach, among others.
• Operational risk – The CRR3 replaces all methods currently allowed by 1 single (non-model based) approach, the so-called Business Indicator Component (BIC), among others.
• Market risk – The CRR3 revises criteria for assigning positions to the trading book vs the banking book and sets adjusted approaches available for banks to calculate their related capital requirements (among others, the simplified standardised approach), among others.
• CVA risk – The CRR3 sets out 3 new approaches (simplified, basic, standardised) that institutions shall use to calculate their own funds requirements for Credit Valuation Adjustment risk, as well as the criteria and conditions for using those approaches, among others.
• Output floor – The CRR3 sets a floor to the capital requirements that are produce by institutions’ internal models, at 72.5% of the own funds requirements that would apply on the basis of standardised approaches, among others.
• Crypto assets – The CRR3 introduces a transitional prudential treatment for institutions’ exposures to crypto-assets, taking into account the legal framework introduced by Regulation (EU) 2023/1114 (MiCA Regulation). This transitional prudential treatment is applicable until the adoption of the new regulatory framework as referred to in Article 501d (1) of the CRR 3, among others.

The CRR3 – and with it the related adjusted reporting requirements – entered into force on 1 January 2025, with the first reference date for bank’s quarterly regulatory reporting being 31 March 2025. The first remittance date for the reporting templates related to the Solvency ratio & the Leverage ratio has been extended from 12 May 2025 to 30 June 2025.
 

The new and revised requirements introduced by the CRR3 bring additional challenges and issues for banks related to their regulatory reporting:

• Revised methodologies – Banks need to identify and implement all changes in methodologies, parameters, underlying assumptions, etc. impacting them and their regulatory reporting.
• New data requirements – Banks needs to identify, collect, store and appropriately process the entire set of additional data needs required to perform the adjusted classifications and apply the revised methodologies. This obviously goes together with an enhanced data management framework to ensure the quality of the collected data and prevent further data quality issues.
• Adjusted reporting format – The regulatory reporting templates format and related instructions have been adjusted accordingly. Banks therefore need to adjust their operational set-up and reporting processes to adequately and timely produce the CRR3-compliant reporting templates. This of course also requires banks to properly and proactively take into consideration the necessary changes within their regulatory reporting software (e.g. new/adjusted data model, technical specificities, etc.) ; banks might otherwise be obliged to consider and implement specific work-arounds and manual adjustments to properly produce their Solvency & Leverage ratios reporting templates.

In conclusion, with the 30 June 2025 deadline for Solvency and Leverage ratios reporting fast approaching, swift actions are crucial to prevent compliance gaps caused by inadequate data management, incorrect interpretation of emerging regulatory treatments, and unreadiness of reporting mechanisms to satisfy the new CRR3 requirements. 

How Deloitte can help

Deloitte’s specialists and dedicated services can help you address your regulatory reporting challenges and remediate your related issues.

We can support you in the following critical areas:

• Implement tactical solutions to ensure timely production and submission of your reporting (e.g., for your first reporting under CRR3);
• (Re-)Parametrize your reporting software;
• Reinforce your team to produce the reporting;
• Conduct independent quality review of your regulatory reporting framework & production process;
• Answer your specific questions on regulatory reporting through Regulatory Hotline;
• Provide insights on best market practices.

We help financial institutions set up, maintain, automate, improve and operate their regulatory reporting framework, and production process.