EBA publishes clarifications to the second set of issues raised by its Working Group on APIs under PSD2

01 April 2019

The European Banking Authority (EBA) published today clarifications to the second set of issues raised and discussed by participants of its Working Group (WG) on APIs under PSD2. The issues relate to API performance and support, the provision of a list of Third Party Providers (TPPs) that are interested in testing, the testing by TPPs that are not authorised, and the timelines applicable across the EEA if Account Servicing Payment Service Providers (ASPSPs) want to be exempted from the fall-back mechanism.

Background and next steps

In January this year, the EBA established a Working Group (WG) on APIs under PSD2, consisting of 30 individuals representing account servicing payment service providers (ASPSPs), third party providers (TPPs), API schemes, and others market participants. The aim of the group is to facilitate industry preparedness for the Regulatory Technical Standard (RTS) on Strong Customer Authentication and Common and Secure Communication and to support the development of high-performing and customer-focused APIs under PSD2.

The group is tasked with identifying issues and challenges that market participants face during the testing and use of API interfaces in the period leading up to the application date of the RTS on 14 September 2019. The group is also asked to propose solutions on how the identified issues could be addressed, which the EBA and national authorities will then consider.

On 11 March 2019, the EBA published clarifications to the first set of issues raised by its working group. Today's publication is the response to the second set of issues that the group had raised. In the weeks and months to come, the EBA will add further clarifications.

EBA updates methodological guidance on risk indicators and analysis tools

20 March 2019

The European Banking Authority (EBA) published today an updated methodological guide on how to compile risk indicators and detailed risk analysis tools. This guidance, which describes how risk indicators are computed in EBA publications, allows competent authorities and users of EBA data to interpret key bank figures in a consistent fashion when conducting their risk assessments.

This update includes additional indicators based on IFRS 9 information, as well as other indicators to better understand institutions' profitability, exposures to sovereign counterparties and own funds requirements for operational risk, among others. This updated guide is based on the EBA reporting framework version 2.8, applicable from December 2018 onwards.

EBA launches call for papers for its 2019 Policy Research Workshop

15 March 2019

The European Banking Authority (EBA) launches today a call for research papers in view of the 2019 Policy Research Workshop taking place on 27-28 November 2019 in Paris on the topic "The future of stress tests in the banking sector – approaches, governance and methodologies". The submission deadline is 12 July 2019.

The workshop aims at bringing together economists and researchers from supervisory authorities and central banks, as well as leading academics, to discuss the future of stress testing in the banking sector and what measures could be taken by policy makers to improve and reap further benefits after several years of stress test exercises.

In preparation for the workshop, the EBA invites the submission of policy oriented, preferably empirical, research papers on the future of stress tests in the banking sector. Researchers from supervisory authorities and central banks are particularly encouraged to submit their papers for presentation.

Interested parties can download the detailed call for papers which includes specific proposed topics for the papers, composition of the programme committee and contact details for the submission of papers. The submission deadline is 12 July 2019.

Contributors will be notified by early September 2019.

 

ESAs' Joint Board of Appeal decides on four appeals under the Credit Rating Agencies Regulation

13 March 2019

The Joint Board of Appeal (BoA) of the European Supervisory Authorities (ESAs – ESMA, EIOPA and EBA) issued decisions regarding four appeals it received by Svenska Handelsbanken AB, Skandinaviska Enskilda Banken (SEB) AB, Swedbank AB, and Nordea Bank Abp against decisions by ESMA regarding infringements of the Credit Rating Agencies Regulation (CRAR).

On 11 July 2018, ESMA decided to fine the five banks for negligently infringing the CRAR by issuing credit ratings without being registered. While the BoA confirmed the infringements found by ESMA, it accepted the appellants' claims of having acted non-negligently and remitted the case to ESMA's Board of Supervisors to adopt amended decisions based on the BoA findings. In the context of the proceedings, the BoA also dismissed an application by one appellant to suspend ESMA's decision addressed to it.

ESMA is currently studying the BoA's decisions, before deciding on the next steps. According to the ESMA Regulation, appeals against decisions of the BoA can be brought before the Court of Justice of the European Union.

EBA amends technical standards on benchmarking of internal approaches

04 August 2016

The European Banking Authority (EBA) published today an amended version, submitted to the EU Commission, of its Implementing Technical Standards (ITS) on benchmarking of internal approaches, for running the 2017 exercise . The amended ITS will assist Competent Authorities in their 2017 assessment of internal approaches both for credit risk, and for market risk. Given the type of the changes introduced in the instructions and templates, the relevant Annexes are replaced in whole in order to have a consolidated version of the updated draft ITS package. The EBA plans to annually update the ITS and to maintain them on a regular basis to ensure the success and quality of future benchmarking exercises.

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EBA consults on amended technical standards on benchmarking of internal models

18 December 2017

The European Banking Authority (EBA) launched today a consultation to amend the Commission Implementing Regulation on benchmarking of internal models to adjust the benchmarking portfolios and reporting requirements in view of the benchmarking exercise the EBA will carry out in 2019. The proposed changes reduce uncertainties in the credit risk portfolios, thus aiming at fostering a common and coherent interpretation and implementation of the reporting requirements across EU institutions. The consultation will run until 31 January 2018.
 
Based on the feedback received from the recent interactions with institutions, the proposals included in this Consultation Paper aim at enhancing the market risk portfolios, as well as at simplifying some hypothetical trades. Minor changes to the reporting templates and instructions have been included to keep the portfolios up to date and the reported data relevant for the 2019 assessment.
 
These revised benchmarking portfolios and reporting requirements are expected to be applicable for the submission of initial market valuation data in Q3 2018 and of other market and credit risk data in 2019 (i.e. with reference date 31 December 2018).

Consultation process

Responses 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 January 2018.
 
A public hearing will take place at the EBA premises on 23 January 2018 from 11:00 to 12:30 UK time. 

Legal basis and background

Article 78 of the Capital Requirements Directive (CRD) requires competent authorities to conduct an annual assessment of the quality of internal approaches used for the calculation of own funds requirements. To assist competent authorities in this assessment, the EBA calculates and distributes benchmark values against which individual institutions' risk parameters can be compared. These benchmark values are based on data submitted by institutions as laid out in the Capital Requirements Regulation (CRR), which specifies the benchmarking portfolios, templates and definitions to be used as part of the annual benchmarking exercises.
 

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ESAs propose amendment to PRIIPs Key Information Document to clarify application to investment funds

08 March 2019

The European Supervisory Authorities (ESAs) submitted a letter to the European Commission on the draft regulatory technical standards to amend the Delegated Regulation covering the rules for the Key Information Document (KID) for Packaged Retail and Insurance-based Investment Products (PRIIPs).

The amendment clarifies the application of the KID to investment funds where these are offered as underlying investment options to a PRIIP (so-called "multi-option products" or "MOPs"). The amendment follows a recent decision by the European co-legislators to defer the application of the KID to these investment funds by two years from the end of this year until the start of 2022. The aim of the ESAs' proposal is to provide, in good time, legal certainty to market participants before the expiry of the current provision in the PRIIPs Delegated Regulation at the end of this year.

Before the draft Regulatory Technical Standards (RTS) will become binding, they need to be endorsed by the European Commission followed by a period of scrutiny from the European Parliament and the Council. 

EBA issues revised list of validation rules

08 March 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 consults on Guidelines on credit risk mitigation for institutions applying the IRB approach with own estimates of LGD

25 February 2019

The European Banking Authority (EBA) launched today a consultation on its Guidelines on Credit Risk Mitigation in the context of the advanced internal rating-based (A-IRB) approach, aim to eliminate the remaining significant differences in approaches in the area of credit risk mitigation (CRM), which are either due to different supervisory practices or bank-specific choices. These draft Guidelines complement the EBA Report on CRM, which focused on the standardised approach (SA) and the foundation-IRB approach (F-IRB). The consultation runs until 25 May 2019.

The Guidelines provide guidance on the application of the CRM provisions currently laid down in the Capital Requirements Regulation (CRR) applicable to institutions using the A-IRB Approach. In particular, they clarify the eligibility requirements for different CRM techniques, namely funded and unfunded credit protection (e.g. collateral and guarantees), available to institutions.

For funded credit protection, the Guidelines provide a mapping to the eligibility requirements of legal certainty and collateral valuation applicable to institutions using the SA and the A-IRB approach. The Guidelines also clarify how institutions may recognise the effects of different CRM techniques for capital requirement purposes. In particular, for unfunded credit protection they clarify the set of compliant approaches that are available to institutions to recognise the effects of the credit protection by adjusting their risk parameter estimates, i.e. the probability of default (PD) or the loss given default (LGD). Moreover, the Guidelines clarify whether exposure values or LGD estimates are to be adjusted to recognise different forms of funded credit protection, namely netting and collateral.

Consultation process

Responses 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 25 May 2019 2019.

A public hearing will take place at the EBA premises in Paris on 15 April 2019 from 14:00 to 16:00 CET time.

Legal basis and next steps

The EBA has developed the draft Guidelines on its own initiative, in accordance with Article 16 of its founding Regulation, which mandates the Authority to issue guidelines and recommendations addressed to competent authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices within the ESFS, and to ensuring the common, uniform and consistent application of Union law.

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EBA opens formal investigation into possible breach of Union law by the Estonian and Danish competent authorities regarding money-laundering activities linked to Danske Bank

19 February 2019

On 18 February 2019, the European Banking Authority (EBA) opened a formal investigation into a possible breach of Union law by the Estonian Financial Services Authority (Finantsinspektsioon) and the Danish Financial Services Authority (Finanstilsynet) in connection with money laundering activities linked to Danske Bank and its Estonian branch in particular. 

The commencement of an investigation follows a letter from the European Commission calling on the EBA to use its powers to examine whether there may have been a failure by the Estonian and Danish competent authorities to comply with their obligations under Union law. Before formally opening the investigation, the EBA conducted preliminary inquiries with both authorities.

The investigation has been opened under Article 17 of the EBA's founding Regulation.  Where an investigation results in a finding of breach of Union law, Article 17 provides that the EBA may address a recommendation to the competent authority concerned setting out the action necessary to comply with Union law.