The EFBS regards consideration of “any leverage ratio requirement” as a capital requirement component (Article 2(2)(e) of the draft standard) to be totally inappropriate. The leverage ratio is naturally lower for institutions with low-risk businesses and makes the risk of default appear too large. The leverage ratio takes no account of the different business models and therefore does not accurately reflect the risk profile of the Bausparkassen, with their low-risk, but high-volume business.
Article 511(2) of Regulation (EU) No 575/2013 (CRR) stipulates that “… the introduction of an appropriate number of levels of the leverage ratio that institutions following different business models would be required to meet…” will be examined. The Bausparkassen view this with interest and welcome in particular the instruction to the EBA to consider the overall risk profile in the assessment of the existing business models. The EBA should review the impact of the leverage ratio on different business models and pay particular attention to business models which are considered to entail low risk (recital 95 of the CRR).
In our opinion, it is first necessary to resolve the question of a leverage ratio appropriate to the business model before a leverage ratio requirement can be used as a component for this criterion.
The loss absorption amount should be considerably lower for banks with a low-risk business model, in particular those which operate under special local supervision and local banking law, such as Bausparkassen.
We propose creating a specific peer group for Bausparkassen on account of the similarity of their business. In view of the past history of low losses arising in the case of Bausparkassen, a special group for Bausparkassen would make sense. In this respect, consideration should be given to the security mechanisms specific to the Bauspar system. For example, Bausparkassen set aside a technical security reserve (“Fonds zur bauspartechnischen Absicherung”) which is not classified as own funds, but serves to cover the risks and to maintain the business operations of the Bausparkassen.
The peer group approach should be extended to Bausparkassen (cf. Q 2 and Q 3).
RISKS AND SYSTEMIC RISKS
- Criterion 5 – Business model, funding model and risk profile
In this connection too, we would first like to emphasise the specific nature of the business model of the Bausparkassen, which would point to the need to provide for a peer group for Bausparkassen.
The draft standards provide in Article 6(1) that the resolution authority is informed by the competent supervisory authority of the outcomes of the supervisory review and evaluation process. On the basis of the knowledge gained, the resolution authority has to assess if possibly risks and vulnerabilities are adequately reflected in the capital requirements (paragraph 2). However, as a result of the supervisory review and evaluation process, a capital add-on may possibly already have been ordered by the supervisory authority, which will then be considered as a component of the loss absorption amount.
We therefore suggest clarification (to Article 6(2)) in line with the aim (see Criterion 1), ‘to avoid requiring the resolution authority … to act as a “shadow” supervisor’.