EBA issues revised list of ITS validation rules

10 September 2020

The European Banking Authority (EBA) issued today a revised list of validation rules in its Implementing Technical Standards (ITS) on supervisory reporting, highlighting those, which have been deactivated either for incorrectness or for triggering IT problems. Competent Authorities throughout the EU are informed that data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules.

François-Louis Michaud starts today as new EBA Executive Director

01 September 2020

François-Louis Michaud has started today his new role as Executive Director of the European Banking Authority (EBA). Michaud, who was confirmed in this role after a plenary vote in the European Parliament on 8 July 2020, will serve a five-year renewable term.

EBA issues Opinion regarding the European Commission’s intention to amend the EBA’s final draft RTS on economic downturn

31 August 2020

The European Banking Authority (EBA) published today an Opinion in response to the European Commission’s intention to amend the EBAs final draft Regulatory Technical Standard (RTS) on the specification of the nature, severity and duration of an economic downturn. The EBA is of the view that the several changes introduced by the Commission would alter the agreed policy and, therefore, suggests changes with the aim of maintaining the agreed consensus of the originally submitted text.

The EBA’s Opinion identifies three substantive changes introduced by the European Commission. The first one is about the deletion of the requirement, which states that the economic indicators relating to one downturn period should be significantly correlated. The EBA is of the view that such requirement should be re-introduced. The second substantive change relates to the introduction of a proportionality principle for the cost of data (Recital 10 and Article 2), which alters the agreed policy. Here, the EBA suggests some redrafting to clarify the relevant data sources. Finally, for the third substantive change, which is about removing the possibility of considering a shorter time series than 20 years for economic indicators relating to an EU member state that joined the EU less than 20 years ago, the EBA agrees to Commission’s proposal despite the substantive nature of the change.

In addition, the EBA identifies a number of non-substantive and drafting changes, which, in its view, may unintendedly hamper the clarity of the text. The EBA is, therefore, proposing alternative drafting suggestions.

Legal basis and background

The EBA has delivered this Opinion in accordance with Article 10(1), subparagraph 6, of Regulation (EU) No 1093/2010, which requires the Authority to submit its response in the form of an opinion to amendments proposed by the European Commission.

The EBA had submitted its final draft RTS to the European Commission on 5 November 2018.

EBA makes available online tools to submit answers to its study of cost of compliance with supervisory reporting

14 August 2020

Following the launch of the industry questionnaire to support its work on optimising supervisory reporting requirements and reducing reporting costs for institutions, the European Banking Authority (EBA) has made available online tools to allow all stakeholders to submit their responses.

The EBA has set up two separate online surveys given the different deadlines for the qualitative and quantitative sections of the questionnaire.

Responses to the qualitative section of the questionnaire are expected by 1 October 2020, while those to the quantitative questions are expected by 31 October 2020.

Although answering the questionnaire is of voluntary nature, the EBA encourages a wide industry participation to ensure that the input into the analysis, and thus the basis for developing any related recommendation, is of good quality and representative for the EU banking sector.

Legal basis and background

The EBA is mandated by Article 430(8) of the CRR to measure the costs institutions incur when complying with the reporting requirements set out in the EBA’s ITS on supervisory reporting. Such reporting costs should be assessed since the introduction of the common supervisory reporting in the EU in 2013. The EBA is also asked to assess whether these reporting costs are proportionate with regard to the benefits delivered for the purposes of prudential supervision and make recommendations on how to reduce the reporting cost at least for small and non-complex institutions. The findings from this analysis should be formulated in a report and delivered to the European Commission and European Parliament in 2021.

The EBA has set up a dedicated page on its website  and email address cost.of.compliance@eba.europa.eu to support the cost of compliance exercise.

EBA updates its work programme for 2020 in light of the COVID-19 pandemic

14 August 2020

The European Banking Authority (EBA) published today its updated annual work programme for 2020 to reflect all the changes brought in by the COVID-19 pandemic to its activities.

The EBA work programme has been impacted by the outbreak of COVID-19 and its global spread since February 2020, resulting in contained delays mainly to allow banks to focus on and ensure continuity of their core operations, including support to their customers.

The updated work programme aims to alleviate the burden on banks and to limit to the minimum the interaction with the industry. For this reason,  the EBA only launched new consultations which were considered critical, postponed the publication of final technical standards depending on their degree of finalisation and expected time of implementation, and put on hold data collections normally used for ad-hoc analyses.

For ease of comparison, all postponed activities have been highlighted in the updated work programme.

EBA consults on Guidelines on criteria for the use of data inputs in the expected shortfall risk measure under the Internal Model Approach

12 August 2020

The European Banking Authority (EBA) launched today a consultation on draft Guidelines on criteria for the use of data inputs in the risk-measurement model referred to in Article 325bc under the Internal Model Approach (IMA) for market risk. These Guidelines are part of the deliverables included in the roadmap for the new market and counterparty credit risk approaches published on 27 June 2019. The consultation runs until 12 November 2020.

Institutions using the IMA to compute own funds requirements for market risk are required to compute the expected shortfall (ES) risk measure for those risk factors for which a sufficient amount of verifiable prices is available (modellable risk factors). The Guidelines clarify the conditions to be met by the data related to modellable risk factors, which institutions should use in their ES calculations.

In particular, these Guidelines clarify that the data used to compute the ES risk measure should be (i) accurate, (ii) appropriate, (iii) frequently updated, and (iv) complete and overall consistent in its use in the ES risk measure.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 12 November 2020. All contributions received will be published following the end of the consultation, unless requested otherwise.

A public hearing will take place via conference call on 5 October 2020 from 15.30 to 17.30 CET. The dial in details will be communicated in due course.

Legal basis

These Guidelines have been developed according to Article 325bh(3) of Regulation (EU) No 575/2013 (CRR), which mandates the EBA to “issue guidelines specifying criteria for the use of data inputs in the risk-measurement model referred to in Article 325bc”.

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EBA publishes final draft technical standards on disclosure and reporting on MREL and TLAC

03 August 2020

  • These reporting and disclosure standards are a key milestone in the implementation of the EBA roadmaps on Pillar 3 disclosures and on supervisory reporting.
  • These standards cover information on the total loss absorbency capacity framework that global systemically important institutions (G-SIIs) have to comply with, and on the minimum requirement for own funds and eligible liabilities (MREL), that may apply to any institution, in an integrated manner.
  • The disclosures aim to provide market participants with the information to understand both the loss absorbency capacity of the entity and their position if that entity is liquidated or resolved.
  • The reporting framework will provide both resolution authorities and supervisors with the necessary information to monitor the compliance with the two requirements.

The European Banking Authority (EBA) published today its final draft Implementing Technical Standards (ITS) on disclosure and reporting on the G-SII requirement for own funds and eligible liabilities (TLAC) and the minimum requirements for own funds and eligible liabilities (MREL). This is the first time that the EBA has developed disclosure and reporting requirements in this area, thus expanding the scope of the existing Pillar 3 and supervisory reporting frameworks in the EU.

The EBA sought to maximise efficiency for entities when complying with their disclosure and reporting obligations and to facilitate the use of information by authorities and market participants. For these purposes, MREL and TLAC are presented in an integrated manner, both in the reporting and disclosure templates. The reporting and disclosure requirements are enshrined in a single set of ITS and a mapping between the quantitative information that has to be disclosed and the data that has to be reported is provided.

The ITS also seek to maximise the consistency and comparability of disclosures under these ITS with the templates and definitions included in the relevant Pillar 3 standards of the Basel Committee on Banking Supervision (BCBS), in order to reinforce market discipline.

The disclosure and reporting requirements on TLAC apply only to G-SIIs, entities that are part of G-SIIs and material subsidiaries of non-EU G-SIIs. The disclosure and reporting requirements on MREL apply to entities other than those whose resolution plan provides that they would be wound up under normal insolvency proceedings.

The final draft ITS were submitted to the European Commission for adoption.

The publication of the technical package accompanying the reporting requirements and including the Data Point Model (DPM), validation rules and XBRL taxonomy is expected in the third quarter of 2020.

Implementation and remittance date

The provisions on the disclosures on TLAC apply immediately after the adoption and entry into force of the ITS. The provisions on disclosures on MREL apply from 1 January 2024 at the earliest.

The first reference date for reporting in accordance with the ITS is the 30 June 2021 (reporting framework 3.0) both for MREL and TLAC.

Legal basis and background

The ITS have been developed in accordance with the mandates included in Articles 430 and 434a CRR and Article 45i BRRD.

Regulation (EU) 2019/876 (the ‘CRR2’) and Directive (EU) 2019/879 (the ‘BRRD2’) implement the Financial Stability Board (FSB) total loss-absorbing capacity (TLAC) standard in the EU and amend the minimum requirement for own funds and eligible liabilities (MREL) that has been in force since 2014. MREL and TLAC (the latter being formally known as ‘the G-SII requirement for own funds and eligible liabilities’) must be met at all times. To enable market participants and authorities to scrutinise compliance with both requirements, the revised Capital Requirements Regulation (CRR2) and Bank Recovery and Resolution Directive (BRRD2) also include disclosure requirements and supervisory reporting requirements.

 

 

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EBA releases an erratum of the technical package on reporting framework 2.10 phase 2

03 August 2020

The European Banking Authority (EBA) published today an erratum of the reporting framework 2.10 phase 2. The package includes the Data Point Model (DPM) dictionary, table layouts and  XBRL taxonomies. The correction is mostly on column 0010 of table C 114.00 in the SBP framework, where the EBA has addressed the issue of missing members.

EBA launches consultation to revise its Guidelines on internal governance

31 July 2020

The European Banking Authority (EBA) launched today a public consultation to revise its Guidelines on internal governance This review takes into account the amendments introduced by the fifth Capital Requirements Directive (CRD V)  and the Investment Firms Directive (IFD) in relation to credit institutions’ sound and effective governance arrangements. The consultation runs until 31 October 2020.

Combating money laundering and terrorist financing is crucial for maintaining stability and integrity in the financial system. Therefore, uncovering any involvement of credit institutions and investment firms in money laundering and terrorist financing can have an impact on the viability and trust in the financial system. In this context, these Guidelines clarify that identifying, managing and mitigating money laundering and financing of terrorism risk is part of sound internal governance arrangements and credit institutions’ risk management framework.

These draft Guidelines further specify and reinforce the framework regarding loans to members of the management body and their related parties. Those loans may constitute a specific source of actual or potential conflict of interest and, therefore, specific requirements have been explicitly included in the Directive 2013/36/EU (CRD). In the same way, other transactions with members of the management body and their related parties have the potential to create conflicts of interest and, therefore, the EBA is providing guidance on how to properly manage them.

Finally, in line with the requirement to have a gender-neutral remuneration policy, the consultation paper contains new guidance on the code of conduct to ensure that credit institutions take all necessary measures to avoid discrimination and guarantee equal opportunities to staff of all genders.

Consultation process

The EBA invites comments solely on the amendments to the EBA Guidelines on Internal Governance as shown in the tracked changes version. Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 31 October 2020.

A public hearing will take place via conference call on 1 October 2020 from 14: 00 to 16:00. All contributions received will be published following the end of the consultation, unless requested otherwise.

Legal basis and next steps

These draft Guidelines have been developed on the basis of Article 74 of Directive 2013/36/EU, which mandates the EBA to further harmonise credit institutions’ governance arrangements, processes and mechanisms across the EU.

The EBA Guidelines will apply to Competent Authorities across the EU, as well as to credit institutions on a solo and consolidated basis. Once the revised Guidelines will enter into force, the 2017 Guidelines will be repealed.

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EBA and ESMA launch consultation to revise joint guidelines for assessing the suitability of members of the management body and key function holders

31 July 2020

The European Banking Authority (EBA) and the European Supervisory Market Authority (ESMA) launched today a public consultation on its revised joint Guidelines on the assessment of the suitability of members of the management body and key function holders. This review reflects the amendments introduced by the fifth Capital Requirements Directive (CRD V) and the Investment Firms Directive (IFD) in relation to the assessment of the suitability of members of the management body. The consultation runs until 31 October 2020.

Combating money laundering and terrorist financing is crucial for maintaining stability and integrity in the financial system. Therefore, uncovering any involvement of credit institutions and investment firms in money laundering and terrorist financing can have an impact on the viability and trust in the financial system. In this context, the draft joint Guidelines clarify that the knowledge, experience and skill requirements are important aspects in the fit and proper assessment of members of the management body and key function holders as they contribute to identifying, managing and mitigating money laundering and financing of terrorism risks.

These draft joint Guidelines also clarify that being a member of affiliated companies or affiliated entities does not in itself represent an obstacle for a member of the management body to acting with independence of mind.

The Guidelines further specify that a gender-balanced composition of the management body is of particular importance. Institutions should respect the principle of equal opportunities for any gender and take measures to improve a more gender-balanced composition of staff in management positions.

The draft joint Guidelines also take into account the recovery and resolution framework introduced by the Bank Recovery and Resolution Directive (BRRD) and provide further guidance in this regard. As part of early intervention measures and during resolution, the suitability of newly appointed members of the management body and of the management body collectively is relevant and requires an assessment.

 

Finally, the draft joint Guidelines take into account the new legislative framework for investment firms adopted in 2019 for the identification of the investment firms subject to the various guidelines.

Consultation process

The EBA and the ESMA invite stakeholders to send comments solely on the amendments to the joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders as shown in the tracked changes version. Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 31 October 2020.

A public hearing will take place on 01 October 2020 from 14: 00 to 16:00. All contributions received will be published following the end of the consultation, unless requested otherwise.

Legal basis and next steps

 

These draft Guidelines have been developed on the basis of according to Article 91 (12) of Directive 2013/36/EU (CRD) and Article 9 of Directive 2014/65/EU.

The joint EBA and ESMA Guidelines will apply to Competent Authorities across the EU, as well as to institutions on a solo and consolidated basis. Once the revised Guidelines will enter into force, the 2017 Guidelines will be repealed.

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