On 31 August 2020, the EBA published an opinion (EBA/Op/2020/12) on the European Commission’s amendments relating to the EBA’s final draft regulatory technical standards (RTS) on the specification of the nature, severity and duration of an economic downturn under Articles 181(3)(a) and 182(4)(b) of the Capital Requirements Regulation (575/2013).
On 5 November 2018, the EBA submitted the final draft regulatory technical standards (RTS) on the specification of the nature, severity and duration of an economic downturn in accordance with Articles 181(3)(a) and 182(4)(a) of Regulation (EU) No 575/2013 (‘CRR’). In its letter of 20 July 2020, the European Commission informed the EBA of its intention to endorse the draft RTS with amendments and submitted to the EBA a modified version of the RTS with its envisaged changes.
The opinion identified three substantive changes, which were as follows:
- change in the conditionality with regard to combining downturn periods of single indicators into one period (Article 1(4)(b));
- proportionality principle for the cost of data; and
- possibility of considering a shorter time series than 20 years for economic indicators relating to an EU member state that joined the union less than 20 years ago.
Furthermore, the opinion identified two further non-substantive changes, which were as follows:
- the redrafting of requirement to customize economic factors to the geographical areas and sectors; and
- the deletion of Article 5 requiring annual and if appropriate ad hoc review of downturn periods.
To read the opinion, please click here.