Response to consultation on Regulatory Technical Standards amending RTS on own funds and eligible liabilities
Q1: Do you consider it appropriate to revert to a three-month deadline for the prior permission regime for own funds and eligible liabilities instruments?
Please refer to the attachment for the full EBF response to the consultation.
The EBF members welcome the EBA’s proposed shortening of the timeframe to process the applications to reduce own fund and eligible instruments from four to three months. In fact, our members consider that even a shorter timeframe would be more appropriate in order to provide banks with greater flexibility in their capital planning.
Considering this EBA proposal as a step in the right direction, we would like to refer the approach taken by other authorities such as the Bank of England which is amending the UK Capital Requirements Regulations (CRR) articles 77.2 and 78a and limiting the need for prior permission to “cases where a firm would either breach its MREL, or start to deplete its applicable capital buffers”, including for Global Systemically Important Banks (G-SIBs). We consider such approach would greatly simplify the task of authorities, eliminate administrative burden for both authorities and banks and allow more efficient and reactive asset and liability management for EU banks. Accordingly, we suggest for a similar approach to be considered by EU authorities. The EBA could also go a step further in introducing proportionality where the proposed transaction has a very limited impact on own funds or eligible liabilities e.g., a few basis points.