This lesson examines the key regulatory requirements and prudential standards that banks must comply with, including capital adequacy, liquidity, and conduct of business rules.

6.1 The Basel Framework and Capital Adequacy
The Basel Accords are the primary international regulatory framework for banks. The EBA contributes to the implementation of the Basel standards through the development of binding technical standards for the Single Rulebook . Key capital ratios include the Common Equity Tier 1 (CET1) ratio (minimum 4.5% of risk-weighted assets), Tier 1 capital ratio (minimum 6%), and Total Capital ratio (minimum 8%). Liquidity requirements include the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) .

6.2 The Capital Requirements Directive (CRD)
The CRD is the European legislative framework implementing Basel standards. Article 48h of the CRD requires third-country branches (TCBs) to maintain a registry book to track all assets and liabilities booked in the Member State and to manage those assets autonomously . The EBA’s Single Rulebook provides harmonised prudential rules for all EU Member States, covering capital, liquidity, governance, and risk management.

6.3 Conduct of Business Regulation
Conduct of business rules focus on consumer protection and market integrity. Key areas include fair treatment of customers, transparency in product information, suitability and appropriateness assessments, and prohibitions on market abuse and insider trading . The University of Chester module includes “The examination of best practice for complaints handling in a financial organisation and the role of the Financial Ombudsman Service” .