What are legislative programmes, and why do they matter?
Legislative programmes are investment schemes established under EU, national or regional legislation that combine public support (such as guarantees or co‑investment) and private financing. These programmes boost equity investment in businesses in strategic sectors like clean tech, biotech, security and defence. Legislative programmes involve safeguards and their use by banks is subject to the supervision of competent banking authorities.
Banks that invest in equity under legislative programmes benefit from more favourable prudential treatment when calculating their capital requirements, meaning they are required to hold less capital than for other types of equity investment.
Legislative programmes can make it easier for banks to invest in equity in areas that are key to Europe’s long‑term competitiveness and economic security, in line with the Competitiveness Compass or the ReArm Europe Plan/Readiness 2030.
What is the Commission doing on the legislative programmes for banks?
Today, the Commission has adopted a Communication on the prudential treatment of investment in equities by banks under legislative programmes in the Capital Requirements Regulation (CRR).
The Communication aims to ensure the consistent application of this provision across the single market and ultimately increase equity investment while maintaining the soundness of the banking sector.
The Communication also establishes a dedicated registry that will be made available on the Finance website to provide transparency on legislative programmes that meet the criteria of CRR.
What are the conditions for a programme to be eligible under Article 133(5) of the Capital Requirement Regulation?
To be eligible, a legislative programme must meet three key conditions
- public financial support: The programme must provide significant subsidies or guarantees for the investment for example, through public co‑investment, grants, or risk‑sharing mechanisms. This support can come from the EU, Member States, national promotional banks, or similar public bodies
- government oversight: The programme must include some form of public oversight such as transparent selection procedures, monitoring systems, and controls to ensure public resources are used effectively and in line with policy objectives
- restrictions on the equity investment: To limit risk, the programme must contain clear restrictions — such as limits on the type, size, or location of eligible investments, or caps on how much ownership a bank can take
In addition, the programme must be established through an act of general and abstract application such as an EU regulation, a national law, or a budgetary decision. One‑off or ad hoc measures, as well as purely private initiatives, do not qualify.
These conditions are designed to ensure that only well‑structured, transparent, and policy‑aligned programmes benefit from the more favourable capital treatment available under Article 133(5) CRR.
What is the preferential prudential treatment for banks when investing through a legislative programme?
Subject to the approval of their supervisors, banks can apply a 100% risk‑weight to equity exposures incurred under legislative programmes which satisfy the criteria of Article 133(5) of the Capital Requirements Regulation (CRR), up to 10% of their own funds, instead of the normal risk weights for equity exposures – 250% or, where applicable, 400%.
Is this giving special treatment to certain investments? Does it distort the market?
No. The Communication does not favour specific sectors as investment targets. In line with the international standards of the Basel Committee on Banking Supervision, these programmes are subject to strict conditions set out in Article 133(5) of the Capital Requirements Regulation (CRR), including public backing, transparency, and risk management safeguards. The aim is to ensure that bank capital flows where it is most needed, in line with Europe’s strategic priorities. It is available to all institutions that meet the requirements, thus not favouring specific institutions.
Will this really change anything? Do banks even want to invest in equity?
The main business of banks is lending. With clear rules and the right incentives, legislative programmes can encourage banks to enter into more long‑term, diversified equity investments, with the appropriate safeguards. The impact will also be significant as the eligibility to legislative programmes will be combined with other initiatives under the Savings and Investments Union (SIU), such as the Solvency II review which also aims at incentivising insurers’ long‑term equity investments. The draft Solvency II delegated regulation will allow also insurers to benefit from preferential capital treatment for equity investments under legislative programme, aligning the eligibility conditions in the insurance regulatory framework with those applying to banks.
Could this mean public money ends up backing risks incurred by private investors?
No. These programmes are designed with oversight and robust eligibility criteria to make sure public backing is used responsibly. The goal is to reduce risk for banks in targeted areas thanks to the positive selection operated by the public sector. In general, there is a legitimate public policy interest in boosting investments carried out by European institutions, national promotional banks and similar entities that help deliver on EU strategic priorities.
Does this encourage banks to take on too much risk?
No. This is not about loosening prudential rules. The provision is in line with the standards of the Basel Committee on Banking Supervision. Banks can only benefit from the favourable prudential treatment when investing through programmes that meet strict conditions, including public support, transparency, and safeguards, and subject to the prior approval of their supervisor.
How will this be applied consistently across all EU member states?
Today’s communication aims to provide guidance to Member States, supervisors and market participants on the conditions that a programme shall meet to be eligible under Article 133(5) of the CRR. This will foster the consistent application of this provision across the single market. In addition, the Commission has created a public register of legislative programmes on the Finance website. This brings transparency for banks, supervisors and investors, and supports consistent implementation across the Single Market.
What is the register of legislative programmes, and how does it work?
The register will list legislative programmes that have been notified to the Commission by Member States or relevant European institutions. The register provides transparency for the benefit of market participants in the Single Market and supports faster decision‑making by banking and insurance supervisors. It does not replace supervisory approval, and it is not legally binding.
The register is publicly available on the Finance website and will be regularly updated.
Member States and European institutions may notify programmes to the Commission using a standard form. The Commission will then review the submission and, if appropriate, include the programme in the register.
Related links
Savings and investments union
Prudential requirements
Public register of legislative programmes under the Capital Requirements Regulation
