Because of its legal form as a directive, 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 KWG and subsidiary regulations.
The CRD IV, which was fundamentally amended in June 2019 by the CRD V, must be transposed into national law by 28 December 2020.
The provisions of the CRD and the options and discretions in the CRR are transposed into national law:
- in the Banking Act (Kreditwesengesetz, KWG)
- in the German Solvency Regulation (Solvabilitätsverordnung, SolvV) and
- in the German Large Exposures Regulation (Großkredit- und Millionenkreditverordnung, GroMiKV).
For instance, the KWG and the SolvV contains capital requirements in addition to those in the CRR, as well as requirements concerning the capital buffer requirements (capital conservation buffer, countercyclical capital buffer, systemic risks buffer and buffers for global and other systemically important institutions.
The discretionary right provided to Member States in the 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. This option provided to Member States is available until no later than 31 December 2028.
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 the Federal Financial Supervisory Authority BaFin (Minimum Requirements for Risk Management (Mindestanforderungen an das Risikomanagement, MaRisk), (see also Supervisory practice). This also served to implement the Pillar 2 buffers in accordance with the Basel Capital Accord (see also Basel regulatory framework).