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Topic: Capital Adequacy

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Commission Implementing Decision on third-country equivalence for purposes of treatment of exposures under CRR

On 4 October 2021, there was published in the Official Journal of the EU (OJ) Commission Implementing Decision 2021/1753 on the equivalence of the  supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures in accordance with the Capital Requirements Regulation (CRR). Article 391 of the CRR, … Continue Reading

Commission adopts Delegated Regulations setting out RTS on prudential requirements under IFR

On 28 September 2021, the European Commission adopted the following Delegated Regulations containing regulatory technical standards (RTS) relating to prudential requirements for investment firms under the Investment Firms Regulation (IFR): Commission Delegated Regulation (EU) of 24.9.2021 supplementing the IFR with regard to RTS specifying the amount of total margin for the calculation of the K-factor … Continue Reading

EBA launches 2021 EU-wide transparency exercise

On 24 September 2021, the European Banking Authority (EBA) launched its regular EU-wide transparency exercise, whose results are expected to be published at the beginning of December. As in the past, the exercise is exclusively based on supervisory reporting data, which will keep the burden for the banks to a minimum. Transparency exercises are conducted … Continue Reading

Commission call for advice – review of the EU macro-prudential framework

On 21 September 2021, there was published a letter that the European Commission had sent to the European Banking Authority (EBA) asking for support in the preparation of the review of the macro-prudential framework for banking, as mandated by Article 513 of the Capital Requirements Regulation. As part of the review, the Commission is seeking … Continue Reading

EBA publishes final guidance to assess breaches of the large exposure limits

On 15 September 2021, the European Banking Authority (EBA) published a final report containing guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures to return to compliance. The guidelines have been developed in accordance with the mandate contained in Article 396(3) of the … Continue Reading

Basel III and global cooperation: where do we go from here?

On 8 September 2021, the Basel Committee on Banking Supervision published a speech given by its Secretary General, Carolyn Rogers, entitled Basel III and global cooperation: where do we go from here? During the course of her speech Carolyn Rogers addresses, among other things, some of the more common arguments that have been used to … Continue Reading

ECB / EBA letter to the Commission on the implementation of the outstanding Basel III reforms

 On 7 September 2021, the European Central Bank (ECB) and the European Banking Authority (EBA) published a joint letter that they had sent to the European Commission regarding the EU implementation of the outstanding Basel III reforms. In the letter the ECB and EBA argue that it is “crucial to avoid implementation approaches that would … Continue Reading

The EU should stick to the Basel III agreement

On 7 September 2021, a group of EU prudential supervisors and central banks published a joint letter that they had sent to the European Commission arguing that the EU’s legislative proposal implementing the final parts of the Basel III framework should adhere to both the letter and the spirit of the Basel III agreement. They … Continue Reading

Commission adopts IFD Delegated Regulations

On 13 August 2021, the European Commission adopted a: Delegated Regulation supplementing the Investment Firms Directive (IFD) with regard to regulatory technical standards (RTS) specifying appropriate criteria to identify categories of staff whose professional activities have a material impact on the risk profile of an investment firm or of the assets that it manages. Delegated … Continue Reading

Consultation on Implementing Decision on the equivalence of certain third countries for the purposes of the treatment of exposures in accordance with the CRR

On 6 August 2021, the European Commission issued a consultation a draft Implementing Decision on the equivalence of the supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures in accordance with the Capital Requirements Regulation (CRR). The deadline for comments on the draft Implementing Decision is … Continue Reading

SSM-wide stress test 2021

On 30 July 2021, the European Central Bank (ECB) published the results of its 2021 stress test. The stress test shows that the euro area banking system is resilient to adverse economic developments. The Common Equity Tier 1 capital ratio of the 89 ECB supervised banks in the stress test would fall by an average … Continue Reading

EBA publishes the results of its 2021 EU-wide stress test

On 30 July 2021, the European Banking Authority (EBA) published the results of the 2021 EU-wide stress test, which involved 50 banks from 15 EU and EEA countries, covering 70% of the EU banking sector assets. The stress test is characterised by an adverse scenario that assumes a prolonged COVID-19 scenario in a “lower for … Continue Reading

SRB approach to prior permissions regime

On 28 July 2021, the Single Resolution Board (SRB) published information on its approach to prior permissions for eligible liabilities, in line with upcoming regulatory changes. Banks need an authorisation under Articles 77 and 78a of the Capital Requirements Regulation (CRR) to redeem eligible liabilities, as of 27 June 2019. Article 78a(3) of the CRR … Continue Reading

Basel Committee consults on an amendment to the process for reviewing the G-SIB methodology

On 20 July 2021, the Basel Committee of Banking Supervision published a consultation document setting out a technical amendment to the Basel framework. The amendment sets out a new process that will be used by the Committee to review the assessment methodology for global systemically important banks (G-SIBs). The Committee plans to replace the existing … Continue Reading

EBA consults to amend its technical standards on currencies with constraints on the availability of liquid assets

On 16 July 2021, the European Banking Authority launched a public consultation on amendments to its Implementing Technical Standards on currencies with constraints on the availability of liquid assets in the context of the liquidity coverage ratio. The proposed amendments remove the Norwegian Krone from the list, with the result that no currency will be … Continue Reading

FSB interim report on lessons learnt from the COVID-19 pandemic from a financial stability perspective

On 13 July 2021, the Financial Stability Board (FSB) published an interim report on the lessons learnt from the COVID-19 pandemic from a financial stability perspective. Among other things the interim report notes that: So far, the global financial system has weathered the COVID-19 pandemic thanks to greater resilience, supported by the G20 reforms, and … Continue Reading

EBA publishes final guidelines for the use of data inputs in the expected shortfall risk measure under the IMA

On 13 July 2021, the European Banking Authority (EBA) published final guidelines that clarify the requirements that the data inputs used to determine the scenarios of future shocks applied to modellable risk factors should meet. The guidelines, which have been developed in accordance with Article 325bh(3) of the Capital Requirements Regulation (CRR), become applicable from … Continue Reading

Basel Committee – technical amendments to the calculation of minimum haircut floors for securities financing transactions

On 1 July 2021, the Basel Committee on Banking Supervision published two technical amendments to the standard on minimum haircut floors for securities financing transactions (SFTs). The first technical amendment addresses an interpretative issue relating to collateral upgrade transactions and the second corrects for a misstatement of the formula used to calculate haircut floors for … Continue Reading

ECB decision extending leverage ratio relief for banks published in OJ

On 30 June 2021, there was published in the Official Journal of the EU Decision (EU) 2021/1074 of the European Central Bank of 18 June 2021 on the temporary exclusion of certain exposures to central banks from the total exposure measure in view of the COVID-19 pandemic and repealing Decision (EU) 2020/1306. The decision extends … Continue Reading

EBA confirms quality of unsolicited credit assessments

On 1 July 2021, the European Banking Authority (EBA) issued a revised Decision confirming the quality of unsolicited credit assessments assigned by certain External Credit Assessment Institutions (ECAIs) for calculating institutions’ capital requirements. The revised Decision, which reflects the recognition of two additional ECAIs and the de-registering of three ECAIs, is part of the Single … Continue Reading

EBA consults to review its guidelines on common procedures and methodologies for the supervisory review and evaluation process

On 28 June 2021, the European Banking Authority (EBA) issued a consultation on revised guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing. The purpose of the revisions is to implement recent changes introduced by the Capital Requirements Directive V and the Capital Requirements Regulation II, … Continue Reading

EBA publishes final draft technical standards on supervisory disclosure under the Investment Firms Directive

On 25 June 2021, the European Banking Authority (EBA) issued final draft Implementing Technical Standards (ITS) on information on supervisory approaches and aggregate statistical data concerning the new prudential requirements that Member State competent authorities will have to disclose publicly for all types of EU investment firms authorised under MiFID II. The EBA has developed … Continue Reading

Commission adopts final one-year extension of the transitional regime for capital requirements for non-EU CCPs

On 24 June 2021, the European Commission extended by an additional year the current transitional regime regarding the capital requirements that EU banks and investment firms must maintain when exposed to non-EU central counterparties. The transitional regime will now continue to apply until 28 June 2022. However, this is the last and final extension possible … Continue Reading

EBA launches consultation to amend technical standards on credit risk adjustments

On 24 June 2021, the European Banking Authority (EBA) issued a consultation regarding amendments to the Regulatory Technical Standards (RTS) on credit risk adjustments in the context of the calculation of the risk weight (RW) of defaulted exposures under the Standardised Approach (SA). The proposed amendments follow up on the European Commission’s Action Plan to … Continue Reading
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