FRANCE Law and Practice Contributed by: Damien Luqué, Martin Jarrige de la Sizeranne and Sacha Tartarin, Lacourte Raquin Tatar
7. Prudential Regime 7.1 Capital, Liquidity and Related Risk Control Requirements Basel III Standards Implementation Although Basel III standards do not directly bind credit institutions, such standards have been implemented in EU legislation in recent years. Thus, prudential requirements that derived from the Basel III standards are now mainly applicable to French credit institutions. The Basel III standards were implemented in the EU legal framework in three main steps: • June 2013 with the adoption of CRR and CRD IV; • May 2019 with the adoption of CRR II and CRD V; and • May 2024 with the adoption of CRR III and CRD VI. CRR III and CRD VI are aimed at finalising the implementation of Basel III standards in EU law by introducing, among other measures, an out - put floor on the capital requirements and the fundamental review of the trading book rules regarding market risk calculation. In France, Basel III standards (as implemented via the EU legislation) were fully adopted through the implementation of CRD V and the direct applicability of CRR II. Risk Management Rules The risk management function within credit insti - tutions is responsible for monitoring risks expo - sure of credit institutions, such as: • non-compliance risk; • credit and counterparty risk; • market risk;
Note that financial institutions’ own deposits are not covered by the French deposit guarantee scheme. That being said, where such deposits represent the deposits of the financial institu - tion’s customers (eg, deposits in segregated accounts) they still benefit from the guarantee scheme. The covered deposits are all funds denominated in euros, or in the currency of any other state, held in deposit accounts, current accounts, reg - ulated and unregulated savings accounts, cash accounts linked to a stock savings plan, bank cheques issued and not cashed, etc. Limits of coverage The French deposit guarantee scheme limit of coverage is EUR100,000 per covered individual and per credit institution. This limit may be increased up to an additional amount of EUR500,000 per event in order to cover various cases of large deposits made within the three months preceding the credit institution’s failure (eg, sale of real estate prop - erty, payment of a succession, etc). Other guarantee schemes In addition to the deposit guarantee scheme, the FGDR is also responsible for the investor compensation scheme (for securities), the per - formance bonds guarantee (for regulated per - formance bonds) and the portfolio management services guarantee.
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