status: Draft/Editing (will not appear in topic list)EBA publishes consumer trends report
28 February 2014
The European Banking Authority (EBA) published today its annual report on consumer trends, giving an overview of the analysis carried out in the area of consumer protection and financial innovation. The report identifies the consumer issues that may arise, or have arisen, from these trends, and describes the approaches the EBA will be taking in 2014 to address them.
The report builds on the findings outlined in the 2013 edition of the report, providing a review of the actions the EBA has undertaken since then, and identifies the key areas of concern, analyses the trends and describes the approaches that the EBA will be adopting in 2014 for its work on consumer protection.
In particular, specific areas have been identified in the report which represent the key consumer issues the EBA will focus on throughout 2014.
Many trends have remained an issue in 2014. For example, matters related to household borrowing, i.e. the means of financing available to households for the purchase of residential properties and for some of their consumption expenditure, remain important. The topic of bank accounts, in turn, has increased in relevance and now includes the topic of transparency and level of fees, as well as account switching.
Crowdfunding has attracted the greatest attention across the EU, as it provides an alternative to traditional channels of borrowing and lending. Mis-selling of products continues to be an issue this year, as some survey results show that consumers still mention this as a reason for losing confidence in the financial institutions. The increased usage of innovative payment methods, such as internet and mobile payments, is also a continuing issue, particularly with regard to payment security. New trends that have emerged for this year include virtual currencies and comparison websites.
The report is built on a wide set of resources, including input from national supervisory authorities (NSAs), reports and statistical datasets produced by third-party entities, views from the EBA Banking Stakeholder Group (BSG) and complaints data from national Ombudsmen across the EU.
20 December 2013
The European Banking Authority (EBA) published today two Reports on liquidity, namely (i) on the impact assessment for liquidity coverage requirements and (ii) on appropriate uniform definitions of extremely high quality liquid assets (extremely HQLA) and high quality liquid assets (HQLA) and on operational requirements for liquid assets. These two reports provide the European Commission with specific recommendations for the purpose of its forthcoming delegated act.
This Report combines an empirical analysis of liquidity data provided by 357 European banks on a voluntary basis, covering about 2/3 of total banking assets in the EU, case studies as well as a literature review on this topic.
Overall, the analysis carried out by the EBA shows that a specification of the general liquidity requirement is not likely to have a material detrimental impact on the stability and orderly functioning of financial markets or on the economy and the stability of the supply of bank lending. To a large extent, this can be explained by the fact that EU banks already show an average Liquidity Coverage Ratio (LCR) of 115 per cent.
However, the potential impact differs depending on the business model. Diversified business models tend to be more adapted to the LCR than specialized banks. The EBA is, therefore, proposing specific derogations for certain business models under stringent and objective conditions.
The EBA concludes that the calibration of the liquidity coverage requirement as defined by the Basel Committee on Banking Supervision (BCBS) and endorsed by Governors and Heads of Supervisors (GHOS) is generally appropriate also across the European Union.
Finally, the EBA highlights that the work underway at the international level to recognise committed liquidity facilities (CLF) at central banks should be taken into due consideration.
The EBA has developed an empirical analysis aimed at identifying the liquidity features of financial instruments at asset class level on the basis of a range of liquidity metrics (basically price and volume metrics) and variables captureing credit quality.
The final EBA recommendations for the definitions of liquid assets combine the results of this empirical analysis with qualitative supervisory judgment and reflect the great importance the EBA attaches to the alignment with the international standards defined by the BCBS.
In particular, the EBA recommends that all bonds issued or guaranteed by EEA Sovereigns, EEA Central Banks and Supranational Institutions qualify as extremely HQLA. In addition, the EBA recommends that some specific categories of covered bonds, Residential mortgage backed securities (RMBS), corporate bonds, equities and bonds issued by local government institutions be considered as HQLA.
Although the empirical analysis shows some differences in the liquidity features of sovereign bonds, a differentiation in the supervisory treatment would reinforce the fragmentation of the single market and the sovereigns-banks loop.
Also, despite the excellent liquidity features showed by some covered bonds, doubts remain as to whether these findings are sufficient to justify a deviation from the international standards and their inclusion in the category of extremely HQLA - in fact two thirds of the observations come from markets that did not experience a real estate crisis -
The two Reports have been developed on the basis of Regulation 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR).
The delegated act the European Commission is empowered to adopt, as per Article 460 of the CRR, to specify in detail the liquidity coverage requirement, shall be based, amongst others, on these Reports.
To this aim, the EBA has been mandated, to report to the European Commission (i) as per Article 509 (1) of the CRR on the impact of the liquidity coverage requirement on the business and risk profile of institutions established in the Union, on the stability of financial markets, on the economy and on the stability of the supply of bank lending; (ii) as per Article 509 (3) and 509 (5) of the CRR on appropriate uniform definitions of high and of extremely high liquidity and credit quality of transferable assets as well as on appropriate haircuts and on the operational requirements for the holdings of liquid assets for the purposes of liquidity reporting.
As per Article 460 the European Commission shall adopt the delegated act referred to by 30 June 2014
29 November 2013
The EBA published today a report on the remuneration of EU bank staff who received one million Euro or more in total in 2012. Figures show that the number of high earners was limited in most Member States and quite significant in some others. The report is part of the EBA's work on bank staff remuneration policies aimed at ensuring prudent and sustainable risk taking in the EU banking sector.
In 2012, the highest values were reported for the United Kingdom (2,714 high earners), Germany (212), France (177), Italy (109) and Spain (100). The figures include staff paid by institutions, including subsidiaries or branches of any EU-parent institution based in another Member State other than the one where the parent company is located, as well as staff in branches of third country institutions.
The report also provides a preliminary analysis of remuneration structures across the EU. Most high earners were found to belong to categories that include functions with responsibilities throughout the whole institution, from the executive board, to risk management, internal audit, information technology, communication, auditing, corporate finance, legal and human resources.
The data in the report will feed into the overall work of the EBA on remuneration in the EU banking sector. As required by the EU Capital Requirements Directive (CRD), this aims at ensuring that institutions' remuneration policies not only allow for sound and effective management, but also provide an incentive for prudent long-term risk taking in the EU banking sector.
The previous version of the EBA report covering data for 2010 and 2011 was published in July this year.
Directive 2010/76/EC (CRD III) requires national competent authorities to collect information on the number of individuals per institution in pay brackets of at least EUR 1 million, including the business area involved and the main elements of the salary, bonus, long-term award and pension contribution. This information has to be sent to the European Banking Authority (EBA), who shall disclose it on an aggregate home Member State basis in a common reporting format. To facilitate the data collection, the EBA published on 27 July 2012 ‘Guidelines on the data collection exercise regarding high earners'.
18 December 2007
CEBS has published today the findings of a survey it has carried out with regard to regulatory implementation of disclosures by credit institutions as set out in chapter 5 of Directive 2006/48/CE which transposes the Basel Pillar 3 requirements into EU legislation.
The rationale underlying Pillar 3 is that adequate disclosure should allow market participants to assess an entity's capital adequacy. To this end institutions need to disclose information on the scope of application, capital, risk exposures and risk assessment processes at the highest level of consolidation.
While the disclosure should in principle be market-driven, there is a role for supervisors in ensuring that adequate disclosure is provided where institutions have more discretion in assessing capital requirements through the use of internal methodologies. In addition it is agreed that supervisors should facilitate the creation of an adequate environment for the proper functioning of market discipline.
CEBS's survey provides an overview of the situation in the EU. The findings and the discussions within CEBS and with the industry reveal that the implementation of the Pillar 3 provisions does not give rise to major concerns. This is mainly related to the fact that supervisory authorities are largely refraining from taking prescriptive approaches.
A limited number of areas have been identified that merit further attention. The follow up work that CEBS proposes to carry out relates in particular to the application of the disclosure requirements to (significant) subsidiaries and to devising a possible solution where limited disclosure is being provided with a subsidiary's (individual) financial statements.
Connected to this discussion is the relationship between Pillar 3 and accounting disclosures where CEBS will await the outcome of efforts undertaken by the industry before deciding on the need for any measures in this area.
The findings of the note have been discussed with industry representatives during a workshop on Pillar 3 issues held on 7 December 2007. It appeared that industry participants largely shared CEBS's findings and conclusions, and welcomed the proposed way forward. A summary of the discussions at the workshop can be accessed here.