Strategic Priorities at Akinn Group
These core topics are currently driving our advisory and investment conversations with banks and institutional partners.
Our Key Focus Areas:
Regulatory Shifts in EU Bank Equity Participations (CRR3)
Transitioning from Commercial Real Estate to Renewables Exposure in the U.S.
Advancing Private Credit: Moving Up the Quality Ladder Toward Investment Grade and Strategic Bank Partnerships
Spotlight: Equity Participations and Capital Requirements Under CRR3
Beginning in 2025, the Capital Requirements Regulation III (CRR3) will significantly alter how European banks assess capital requirements for equity participations. These regulatory changes aim to better align capital reserves with actual risk exposure, with major implications for portfolio strategy and capital planning.
Key Changes Ahead:
For institutions using the Standardized Approach, equity participations currently carry a 100% risk weight, with high-risk positions assigned 150%. Under CRR3, a gradual increase in risk weights will be introduced:
Standard Equity Exposures:
From 100% in 2025 → 250% by 2030Short-Term & Venture Capital Investments:
From 100% in 2025 → 400% by 2030
For institutions under the IRB Approach (Internal Ratings-Based), CRR3 discontinues the use of internal models for equity exposures after December 31, 2024. These banks will need to adopt the standardized model, requiring significant strategic adjustments.
Our Recommendation:
Now is the time for banks to reevaluate capital strategies, assess exposure profiles, and ensure compliance with the new framework. Proactive preparation will be essential for maintaining resilience and competitiveness in 2025 and beyond.
Coming Up Next
Next week, we’ll turn our attention to the second focus area: The evolving shift of EU bank investments from CRE to renewable energy projects in the U.S., with particular attention to risk outlooks in the wake of the U.S. presidential election.
Contributing authors: Thomas Chambers & Ruben Figueiredo
Primary Contact Details: +44 (0) 203 872 1682 / TChambers@akinngroup.com