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Topic: Capital adequacy

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EBA updates on the monitoring of total loss-absorbing capacity and minimum requirement for own funds and eligible liabilities instruments

On 7 October 2022, the European Banking Authority (EBA) has issued its latest monitoring report regarding total loss-absorbing capacity and minimum requirement for own funds and eligible liabilities (TLAC/MREL).  The report provides policy views based on TLAC/MREL instruments assessed up to February 2022 with a view to continue strengthening the quality of the instruments and … Continue Reading

RTS under Articles 124(4) and 164(8) of the CRR

On 5 October 2022, the European Commission published a draft Delegated Regulation supplementing the Capital Requirements Regulation with regard to regulatory technical standards (RTS) specifying the types of factors to be considered for the assessment of the appropriateness of risk weights for exposures secured by immovable property and the conditions to be taken into account … Continue Reading

Basel Committee report – Buffer usability and cyclicality in the Basel framework

On 5 October 2022, the Basel Committee on Banking Supervision issued a report, Buffer usability and cyclicality in the Basel framework. The report is the Basel Committee’s second report on the impact and effectiveness of the implemented Basel reforms and provides an in-depth examination of several questions regarding buffer usability and cyclicality of the Basel … Continue Reading

EBA updates data used for the identification of G-SIIs

On 29 September 2022, the European Banking Authority (EBA) disclosed the data items used to identify global systemically important institutions within the EU. The EBA has published 13 indicators and updated underlying data for the 30 largest institutions in the EU whose leverage ratio exposure measure exceeds EUR 200bn. Acting as a central data hub … Continue Reading

ESRB to publish a report on whether bank capital requirements can be an effective tool for reducing carbon emissions

On 29 September 2022, the European Systemic Risk Board issued a press release reporting on the meeting that its general board held on 22 September 2022. At the meeting, the general board issued a warning on vulnerabilities in the EU’s financial system. The general board concluded that risks to the financial stability in the EU … Continue Reading

Basel Committee publishes review of margining practices

On 29 September 2022, the Basel Committee on Banking Supervision (Basel Committee) published a report concerning a review of margining practices. Background In non-centrally cleared markets, the Basel Committee and the International Organisation of Securities Commissions (IOSCO) developed a framework that established minimum standards for margin requirements for non-centrally cleared derivatives (although not non-centrally cleared … Continue Reading

Commission Implementing Regulation (EU) 2022/1650 amending the ITS laid down in Implementing Regulation 2016/1646 as regards the main indices and recognised exchanges in accordance with the CRR

On 27 September 2022, there was published in the Official Journal of the European Union (OJ), Commission Implementing Regulation (EU) 2022/1650 amending the implementing technical standards (ITS) laid down in Implementing Regulation (EU) 2016/1646 as regards the main indices and recognised exchanges in accordance with the Capital Requirements Regulation. The Implement Regulation amends the ITS … Continue Reading

Stress testing the UK banking system: key elements of the 2022 annual cyclical scenario

On 26 September 2022, the Bank of England announced that it was returning to the annual cyclical scenario stress-test framework. The stress test will test the resilience of the UK banking system to deep simultaneous recessions in the UK and global economies. It will assess bank balance sheets and the resilience of the UK banking … Continue Reading

PRA Policy Statement 8/22 ‘Definition of capital: Updates to PRA rules and supervisory expectations’

On 26 September 2022, the PRA published Policy Statement 8/22 ‘Definition of capital: Updates to PRA rules and supervisory expectations’ (PS8/22). In PS8/22 the PRA provides feedback and final policy following Consultation Paper 2/22 ‘Definition of capital: updates to PRA Rules and supervisory expectations’ (CP2/22). In CP2/22 the PRA set out its proposed approach to … Continue Reading

EBA launches 2022 EU-wide transparency exercise

On 23 September 2022, the European Banking Authority (EBA) launched its annual EU-wide transparency exercise, as part of its efforts to monitor risks and vulnerabilities and to reinforce market discipline. As in the past the exercise is exclusively based on supervisory reporting data, which will keep the burden for the banks to a minimum. Results … Continue Reading

SRB welcomes adoption of the review of the ‘CRR quick-fix’

On 22 September 2022, the Single Resolution Board (SRB) announced that they welcomed the adoption of the review of the Capital Requirements Regulation (CRR), known as ‘CRR quick-fix’. The CRR quick-fix clarifies the treatment of total loss-absorbing capacity (TLAC) surpluses located in third countries for banks with a multiple entry point of entry (MPE) resolution … Continue Reading

Commission Delegated Regulation (EU) 2022/1622 on emerging markets and advanced economies

On 21 September 2022, there was published in the Official Journal of the European Union(OJ) Commission Delegated Regulation (EU) 2022/1622 of 17 May 2022 supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards on emerging markets and advanced economies. The RTS specify which countries constitute advanced economies for the purposes of specifying … Continue Reading

PRA letter to Mel Stride MP on Simpler-regime Firm

On 6 September 2022, the Prudential Regulation Authority (PRA) published a letter from its CEO, Sam Woods, to Mel Stride MP, Chair of the Treasury Committee, providing a response to an earlier letter from Ms Stride regarding the PRA’s proposed definition of a Simpler-regime Firm. The letter provides thoughts on the following points but these … Continue Reading

Commission Delegated Regulation (EU) 2022/1455 supplementing the IFR with regard to RTS for own funds requirement for investment firms based on fixed overheads

On 5 September 2022, there was published in the Official Journal of the European Union (OJ), Commission Delegated Regulation (EU) 2022/1455 of 11 April 2022, supplementing the Investment Firms Regulation with regard to regulatory technical standards for own funds requirement for investment firms based on fixed overheads. The RTS: Specify the deductions to be applied … Continue Reading

Corrigendum to Commission Delegated Regulation (EU) 2022/1159 of 11 March 2022 supplementing IFR with regard to RTS for public disclosure of investment policy by investment firms

On 25 August 2022, there was published in the Official Journal of the European Union a Corrigendum to Commission Delegated Regulation (EU) 2022/1159 of 11 March 2022 supplementing the Investment Firms Regulation with regard to regulatory technical standards for public disclosure of investment policy by investment firms. The Corrigendum inserts on page 15, in Annex … Continue Reading

Commission Delegated Regulation supplementing the CRR with regard to RTS specifying exotic underlyings and the instruments bearing residual risks for the purposes of the calculation of own funds requirements for residual risks

On 16 August 2022, the European Commission published Commission Delegated Regulation of 16.8.2022 supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards (RTS) specifying exotic underlyings and the instruments bearing residual risks for the purposes of the calculation of own funds requirements for residual risks. The final draft RTS specify what an … Continue Reading

Commission Delegated regulation specifying the calculation methods of gross jump-to-default amounts for exposure to default risk arising from certain derivative instruments, and specifying the determination of notional amounts of instruments other than the instruments referred to in Article 325w(4) of the CRR

On 11 August 2022, the European Commission published a Commission Delegated Regulation supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards specifying the calculation methods of gross jump-to-default (JTD) amounts for exposures to debt and equity instruments and for exposures to default risk arising from certain derivative instruments, and specifying the determination … Continue Reading

House of Commons’ Treasury Sub-Committee on Financial Services Regulations publishes letter to the PRA regarding the ‘Strong and Simple Framework’

On 10 August 2022, the House of Commons’ Treasury Sub-Committee on Financial Services Regulations published a letter addressed to the Prudential Regulation Authority (PRA) regarding the ‘Strong and Simple Framework’. The letter sets forth that on 20 July 2022, the Sub-Committee held its inaugural meeting, where evidence was taken from two ‘challenger’ banks, as well as … Continue Reading

EBA consults on draft RTS on the determination by originator institutions of the exposure value of SES in securitisations

On 9 August 2022, the European Banking Authority launched a public consultation on its draft regulatory technical standards (RTS) on the determination by originator institutions of the exposure value of synthetic excess spread (SES) in securitisations. The draft RTS have been developed in accordance with Article 248(4) of Capital Requirements Regulation (CRR). The Capital Markets … Continue Reading

European Commission updated webpage on Alignment EU rules on capital requirements to international standards (prudential requirements and market discipline)

On 26 July 2022, the European Commission updated its webpage on Alignment EU rules on capital requirements to international standards (prudential requirements and market discipline). The Commission adoption feedback period has been changed from 26 September 2022 to 27 September 2022.  … Continue Reading

PRA CP13/22 ‘Amendments to the PRA’s approach to identifying other systemically important institutions’

On 21 July 2022, the PRA published Consultation Paper 13/22 ‘Amendments to the PRA’s approach to identifying other systemically important institutions’ (CP13/22). In CP13/22 the PRA is proposing to make changes to its Statement of Policy (SoP) on ‘The PRA’s approach to identifying other systemically important institutions’ (O-SIIs) and its SoP on ‘Interpretation of EU … Continue Reading

EBA analyses the use of specific exemptions included in the large exposures regime

On 22 July 2022, the European Banking Authority (EBA) issued a report in accordance with the mandate given to it under Article 507(1) of the Capital Requirements Regulation covering the use of some exemptions included in the large exposures regime. For the report, the EBA conducted an ad hoc data-collection exercise involving about 181 EU … Continue Reading

EBA publishes final regulatory products to harmonise the supervisory review and evaluation process of investment firms

On 21 July 2022, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) jointly published final guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for investment firms. The final guidelines set out common process and criteria for the assessment of the main SREP elements, including … Continue Reading

EBA launches discussion on 2023 EU-wide stress test methodology

On 21 July 2022, the European Banking Authority (EBA) published a draft methodology for its 2023 EU-wide stress test. The draft methodology and draft templates are the starting point for an informal discussion with banks so as to receive their input, which will be taken into account when finalising both documents. The final methodology will … Continue Reading
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