EBA issues Opinion on measures to address macroprudential risk following notification by National Bank of Belgium (NBB)

03 March 2020

The European Banking Authority (EBA) published today an Opinion following the notification by the National Bank of Belgium (NBB) of its intention to extend a measure introduced in 2018 regarding the use of Article 458 of the Capital Requirements Regulation (CRR). The measure is primarily driven by persistent macroprudential risks in the Belgian economy related to a substantial level of systemic risk in banks’ mortgage portfolios and of macrofinancial vulnerabilities. Based on the evidence submitted, the EBA does not object to the extension of the proposed measure, which will be applied from 1 May 2020 to 30 April 2021.

The measure for that the extension is intended to increase the risk weights for internal ratings based (IRB) banks’ retail exposures secured by residential immovable property located in Belgium and consists of two components. The first component imposes a 5-percentage-point risk weight add-on for IRB banks’ exposures to mortgage loans. The second component further increases the risk weights as a function of the risk profile of the IRB bank’s mortgage portfolio by applying a multiplier of 1.33 on the (microprudential) risk weight.

In its Opinion, addressed to the Council, the European Commission and the NBB, the EBA acknowledges, in line with the European Systemic Risk Board (ESRB), the sustained high level of systemic risk in Belgian banks’ mortgage portfolios and the persistence of macroprudential vulnerabilities in the Belgian financial system. The combined increase in house prices and debt levels may pose a threat to the financial stability of banks in Belgium in the event of a downturn.

In light of this conclusion, the EBA does not object to the extended deployment, by the NBB, of the proposed macroprudential measures, which will be applied from 1 May 2020 to 30 April 2021.

Background

Already in its Opinion issued on 23 February 2018, the EBA did not object to the adoption of this measure, taking into consideration its effect on increasing the resilience of the Belgian banking sector. For more information on this EBA Opinion, please see https://eba.europa.eu/eba-issues-opinion-on-measures-to-address-macroprudential-ri-3 .

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EBA updates list of institutions involved in the 2020 supervisory benchmarking exercise

27 February 2020

The European Banking Authority (EBA) published today an updated list of institutions, which have a reporting obligation for the purpose of the 2020 EU supervisory benchmarking exercise. The EBA runs this exercise leveraging on established data collection procedures and formats of regular supervisory reporting and assists Competent Authorities in assessing the quality of internal approaches used to calculate risk weighted exposure amounts.

EBA acknowledges adoption of amended supervisory reporting standards by the European Commission

14 February 2020

The European Banking Authority (EBA) acknowledged today the adoption by the European Commission of the Implementing Act amending Regulation (EU) No 680/2014 (Implementing Technical Standards on Supervisory Reporting) with regard to COREP and FINREP changes. The Implementing Act, which is based on the final draft Implementing Technical Standards (ITS) on supervisory reporting submitted by the EBA in July 2019, was adopted by the Commission on 14 February 2020 but its publication in the EU Official Journal is still pending. The amendments to the reporting framework will apply with different reference dates due to different application dates of the underlying regulatory requirements. The first reference date, concerning COREP changes, will be 31 March 2020 (reporting framework v2.9).

  • The COREP amendments concern the new securitisation framework and changes to LCR to align with the LCR amending Act;
  • The FINREP amendments concern the reporting requirements on non-performing exposures (NPE) and forbearance to allow the monitoring of reporting institutions' NPE strategies, the reporting requirements on profit and loss items and the implementation of the new International Financial Reporting Standard on leases (IFRS 16).

All the related documents published on the EBA's website have been updated to reflect the adoption of the Implementing Act (see Reporting framework 2.9).

Click here to access the Implementing Act and annexes as adopted by the European Commission.

 

EBA issues Opinion on measures to address macroprudential risk following notification by De Nederlandsche Bank (DNB)

10 February 2020

The European Banking Authority (EBA) published today an Opinion following the notification by the Central Bank of the Netherlands (De Nederlandsche Bank – DNB) of its intention to modify capital requirements in order to address an increase in macroprudential risk. Based on the evidence submitted by the DNB, the EBA does not object to the adoption of the proposed measure, which is based on Article 458 (2) of the Capital Requirements Regulation (CRR). This new measure aims at enhancing the resilience of the Dutch banking sector to a potential severe downturn in the residential real estate market against the background of sustained price increases in real estate over the past few years.

In particular, the DNB notified the EBA of its intention to introduce a new macroprudential measure, which consists of a minimum average risk weight floor at the portfolio level based on the loan-to-value (LTV) ratio of the individual loans. More specially, a 12% risk weight is assigned to the portion of the loan not exceeding 55% of the market value of the property that serves to secure the loan, and a 45% risk weight is assigned to the remaining portion of the loan. If the LTV ratio is lower or equal to 55, then a fixed 12% risk weight is assigned to the loan.

In its Opinion, addressed to the Council, the European Commission and the DNB, the EBA acknowledges, in line with the ESRB recommendation on medium-term vulnerabilities in the residential real estate sector in the Netherlands, the concerns on the build-up of risk in this sector, the large proportion of high-LTV loans, high level of indebtedness in Dutch households and the low risk weights for real estate exposures by Dutch IRB banks. In light of this conclusion, the EBA does not object to the deployment, by the DNB, of its proposed macroprudential measure. 

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EBA issues updated list of validation rules and related taxonomy to improve data quality

04 February 2020

The European Banking Authority (EBA) issued today an updated list of validation rules and XBRL taxonomy related to its Implementing Technical Standards (ITS) on supervisory reporting. This update aims to improve data quality issues for the reporting framework v 2.9.

The package for the reporting framework v 2.9 includes new and amended validation rules, severity status changes and new deactivations/reactivation of validation rules. This update, which concerns validation rules only and no other changes to the reporting framework, will facilitate institutions’ submissions of supervisory reporting data with better quality. The EBA published the update two months before the first applicable reference date to allow its timely implementation.

EBA acknowledges Commission’s decision on equivalence for Serbia and South Korea

23 January 2020

The European Banking Authority (EBA) acknowledged today the EU Commission’s decision to consider the supervisory and regulatory framework applicable to credit institutions in Serbia and South Korea as equivalent to that applied in the Union. The Commission’s decision follows the EBA’s assessment of non-EU countries' equivalence with the EU prudential supervision and regulatory requirements. In its Opinion, in November 2018, the EBA concluded that the supervisory and regulatory framework applicable to credit institutions in Serbia and South Korea can be regarded as equivalent to that applied in the Union.

 

According to the Capital Requirements Regulation (CRR), under well-defined conditions, certain categories of exposures to entities located in countries outside the EU can benefit from the same preferential treatment applied to EU Member States' exposures in terms of capital requirements. This would imply that EU credit institutions can apply preferential risk weights to relevant exposures to entities located in those countries. In particular, such preferential treatment is only available if and when the European Commission adopts an Implementing Decision determining that the country's prudential supervisory and regulatory requirements are at least equivalent to those applied in the EU.

Against this background, and within its mandate to promote supervisory convergence, the EBA was asked by the European Commission to provide technical advice on the equivalence of the legal and supervisory regimes in countries outside the EU.

Following this assessment, the EBA provided its Opinion to the Commission in November 2018 that the supervisory and regulatory framework applicable to credit institutions as documented in domestic laws and regulations in Serbia and South Korea could be regarded as equivalent to those applied in the Union.

As requested by the Commission, the EBA published today this Opinion after the Commission's approval and publication of the related Decision on Equivalence.

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EBA Board of Supervisors selects Gerry Cross as new EBA Executive Director

15 January 2020

The Board of Supervisors (BoS) of the European Banking Authority (EBA) nominated yesterday Gerry Cross as the new Executive Director of the Authority. Gerry Cross was selected from a shortlist of candidates compiled by the EBA Selection Committee.

The EBA informed the Chair of the European Parliament's Committee on Economic and Monetary Affairs (ECON), Irene Tinagli, about its decision, in line with the EBA Regulation. Gerry Cross will be invited by the ECON Committee to a public hearing. After confirmation by the European Parliament, he will be appointed for a renewable five-year term.

Gerry Cross currently serves as Director of Financial Regulation - Policy and Risk, at the Central Bank of Ireland.

EBA issues revised list of ITS validation rules

10 December 2019

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.

EBA publishes technical package on reporting framework 2.9.1

08 November 2019

The European Banking Authority (EBA) published today a new release of reporting framework 2.9.1, which includes the validation rules, the DPM data dictionary, and the XBRL taxonomy. This release fixes some modelling issues on COREP Liquidity and FINREP.

EBA launches consultation on comprehensive Pillar 3 disclosures

16 October 2019

The European Banking Authority (EBA) launched today a public consultation on the new comprehensive Implementing Technical Standard (ITS) for financial institutions' public disclosure, designed to promote market discipline. This ambitious proposal seeks to optimise the EBA Pillar 3 policy framework by moving from a silo based approach, with different disclosure policy products, to an all-inclusive ITS. It also implements regulatory changes introduced by the CRR2 and aligns the disclosure framework with international standards.

The amending regulation (EU) No 2019/876 (‘CRR2') introduced new disclosure requirements for institutions, and a mandate for the EBA to implement them in a way that conveys sufficiently comprehensive and comparable information for market participants to assess the risk profiles of institutions (Article 434a of the CRR2). The new ITS aim to reinforce market discipline, by increasing consistency and comparability of institutions' public disclosures, and to implement the CRR2 regulatory changes in alignment with the revised Basel Pillar 3 standards.

The all-inclusive ITS provide a complete Pillar 3 disclosure framework that seeks to facilitate its implementation by institutions and to improve clarity for users of information. The disclosure ITS have been developed fostering consistency with supervisory reporting, and a mapping between quantitative disclosure data and reporting is provided in order to facilitate compliance by institutions. A parallel consultation regarding the draft ITS on supervisory reporting was also launched today.

This consultation paper is the first one of the deliverables that will be presented in a forthcoming EBA roadmap on institutions' Pillar 3 disclosures. That roadmap, which will be published in Q4 2019, provides an overview of the EBA Pillar 3 strategy, deliverables and timeline for the implementation of all the disclosure requirements included in the CRR2/BRRD2, including ESG risks and climate change related information, as well as the disclosure requirements for investment firms under the IFR.

Consultation process

Responses to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. All contributions received will be published after the consultation closes, unless requested otherwise. The deadline for the submission of comments is 16 January 2020.

A public hearing on this consultation will take place at the EBA premises on 2 December, from 14:00 to 16:00 CET time.

Legal basis and next steps

These draft ITS have been developed in accordance with Article 434a of Regulation (EU) No 575/2013 which mandates the EBA to develop draft implementing technical standards specifying uniform disclosure formats, and associated instructions in accordance with which the disclosures required under Titles II and III shall be made. The same mandate specifies that those uniform disclosure formats shall convey sufficiently comprehensive and comparable information for users of that information to assess the risk profiles of institutions and their degree of compliance with the requirements laid down in Parts One to Seven. To facilitate the comparability of information, the implementing technical standards shall seek to maintain consistency of disclosure formats with international standards on disclosures.

The EBA expects to submit these revised draft ITS to the European Commission in June 2020. The application of the disclosure requirements will be in June 2021.

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