02 September 2013
The European Banking Authority (EBA) launched today a consultation on draft Regulatory Technical Standards (RTS) setting out criteria for identifying the geographical location of all relevant credit exposures, namely credit risk, trading book and securitisation exposures. These RTS will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in the European Union (EU). The consultation runs until 1 November 2013.
Under the capital requirements rules in the EU, institutions at Member State level are required to hold countercyclical buffers (CCB) to protect the banking system against potential losses when excess credit growth is associated with an increase in system wide risks. The size of countercyclical buffers will depend on the countercyclical buffer rates set by national authorities and the portfolio distribution of the institutions. In particular, the buffers to be held by individual institutions with cross-border activities will depend on the geographical location of their credit portfolios and not on the location of the institutions that hold these exposures.
The geographical location is to be determined for certain credit risk, trading book and securitisation exposures, as set out in Article 140 of the Capital Requirements Directive (CRD).
The consultation paper outlines the principles behind the identification of the geographical location of these exposures, on the basis of which the institution-specific countercyclical buffer rates shall be determined. In particular, the consultation paper proposes to use the location of the obligor or debtor as a general principle for the identification of the geographical location.
In order to ease the implementation of these standards for banks with limited cross-border activities and trading book activities, proportionality measures have been introduced in order to reduce the operational burden on these institutions.
Comments 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 1 November 2013.
All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing will take place at the EBA premises on 27 September 2013 from 12.00 to 14.00 hours UK time.
The proposed draft RTS have been developed on the basis of Directive 2013/36/EU of the European Parliament and of the council (CRD). The EBA is expected to submit these draft RTS to the European Commission for endorsement by 1 January 2014.