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Topic: Capital adequacy

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EBA publishes final draft technical standards to identify investment firms’ risk takers and to specify the instruments used for the purposes of variable remuneration

On 21 January 2021, the European Banking Authority (EBA) published final reports containing draft regulatory technical standards (RTS) on: Criteria to identify categories of staff whose professional activities have a material impact on an investment firm’s risk profile or assets it manages under the Investment Firm Directive (IFD). The draft RTS set out qualitative and … Continue Reading

EBA consults on guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate EU parent undertakings under Article 21b of CRD IV

On 15 January 2021, the European Banking Authority (EBA) issued a consultation paper on draft guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate EU parent undertakings as laid down in the CRD IV. Article 21b of the CRD IV sets out a requirement for institutions belonging to … Continue Reading

Commission Implementing Regulation (EU) laying down ITS for the application of the CRR with regard to supervisory reporting of institutions and repealing Implementing Regulation (EU) No 680/2014

On 21 December 2020, the European Commission adopted an Implementing Regulation laying down implementing technical standards (ITS) for the application of the Capital Requirements Regulation with regard to supervisory reporting of institutions and repealing Implementing Regulation (EU) No 680/2014 together with annexes. The Implementing Regulation lays down uniform reporting formats and templates, instructions on and … Continue Reading

EBA launches consultation to amend standards on benchmarking of internal models

On 17 December 2020, the European Banking Authority (EBA) issued a consultation paper setting out proposals for draft Implementing Technical Standards (ITS) amending the European Commission’s Implementing Regulation on the benchmarking of credit risk, market risk and IFRS9 models. The draft ITS have been developed in accordance with Article 78 of the Capital Requirements Directive … Continue Reading

Policy Statement 20/16: Updating the dual-regulated firms Remuneration Code to reflect CRD V

On 17 December 2020, the FCA published Policy Statement 20/16: Updating the dual-regulated firms Remuneration Code to reflect CRD V (PS20/16). The CRD V contains amendments to the provisions on remuneration upon which FCA rules for dual-regulated firms are based. In Consultation Paper 20/14: Updating the Dual-regulated firms Remuneration Code to reflect CRD V (CP20/14), … Continue Reading

EBA launches consultation on its new guidelines on internal governance for investment firms

On 17 December 2020, the European Banking Authority (EBA) issued a consultation paper concerning draft guidelines on internal governance under the Investment Firm Directive (IFD). The guidelines are intended to complete the various governance provisions in the IFD, taking into account the principle of proportionality, by specifying the tasks, responsibilities and organisation of the management … Continue Reading

EBA consults on draft guidelines on remuneration policies for investment firms

On 17 December 2020, the European Banking Authority (EBA) issued a consultation paper containing draft guidelines on remuneration for investment firms as defined in Article 4(1)(1) of MiFID II that do not meet all of the conditions for qualifying as small and non-interconnected investment firms under Article 12(1) of the Investment Firm Regulation (IFR) and … Continue Reading

EBA updates its report on liquidity measures and confirms banks’ solid liquidity position

On 17 December 2020, the European Banking Authority (EBA) published a report on liquidity measures. The report monitors and evaluates the liquidity coverage requirements currently in place in the EU. The liquidity coverage ratio (LCR) of EU banks stood at around 166% in June 2020, materially above the minimum threshold of 100%. The report shows … Continue Reading

EBA publishes final draft technical standards on capital requirements of non-modellable risks under the FRTB

On 17 December 2020, the European Banking Authority (EBA) published a final report containing draft Regulatory Technical Standards (RTS) on the capitalisation of non-modellable risk factors (NMRFs) for institutions using the FRTB Internal Model Approach (IMA) implemented in EU as a reporting requirement.  The RTS have been developed in accordance with Article 325bk(3) of the … Continue Reading

Tackling non-performing loans (NPLs) to enable banks to support EU households and businesses

On 16 December 2020, the European Commission published its strategy to prevent a future build-up of non-performing loans (NPLs) across the EU, as a result of the COVID-19 pandemic. The strategy has four main goals: Further developing secondary markets for distressed assets. A key step in this process would be the adoption of the Commission’s … Continue Reading

EBA consults on technical standards to calculate risk weights of collective investment undertakings

On 16 December 2020, the European Banking Authority (EBA) issued a consultation paper on regulatory technical standards (RTS) on the calculation of risk-weighted exposure amounts of collective investment undertakings (CIUs) in line with the Capital Requirements Regulation. The proposed draft RTS, which will contribute to the calculation of own funds requirements for the exposures in … Continue Reading

EBA publish final draft technical standards on the prudential treatment of investment firms

On 16 December 2020, the European Banking Authority (EBA) issued a final report containing seven final draft regulatory technical standards (RTS) on the prudential treatment of investment firms. The first draft RTS included in the final report have been developed for the mandates related to the authorisation of certain credit institutions. Article 8a(6)(a) of the … Continue Reading

EBA updates its Basel III impact study following the EU Commission’s call for advice

On 15 December 2020, the European Banking Authority (EBA) published its updated ad-hoc impact study on the implementation of Basel III in the EU in response to the European Commission’s call for advice. The study is based on a sample of 99 banks and has a reference date of December 2019. Under the full implementation … Continue Reading

Commission adopts Delegated Regulation on specialised lending exposures under CRR

On 14 December 2020, the European Commission adopted a Delegated Regulation supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards (RTS) for assigning risk weights to specialised lending exposures together with an annex. The RTS specify how institutions should take into account the factors of financial strength, political and legal environment, transaction … Continue Reading

EBA formal opinion on Commission amendments to RTS on the assessment methodology for IRB approach

On 14 December 2020, the European Banking Authority (EBA) published a formal opinion on the European Commission’s amendments of the final draft regulatory technical standards (RTS) on the specification of the assessment methodology for competent authorities regarding compliance of an institution with the requirements to use the internal ratings based (IRB) approach in accordance with … Continue Reading

Basel III monitoring results based on end-December 2019 data published by the Basel Committee

On 10 December 2020, the Basel Committee on Banking Supervision issued the results of its latest Basel III monitoring exercise, based on data as of 31 December 2019. The report sets out the impact of the Basel III framework that was agreed in 2010 as well as the effects of the Basel Committee’s finalisation of … Continue Reading

EBA updates impact of the Basel III reforms on EU banks’ capital

On 10 December 2020, the European Banking Authority (EBA) issued a report on the impact of implementing the final Basel III reforms in the EU. The full Basel III implementation, in 2028, would result in an average increase of 15.4% on the current Tier 1 minimum required capital of EU banks. The results do not … Continue Reading

EBA final draft technical standards on the treatment of non-trading book positions subject to foreign-exchange risk or commodity risk under the FRTB framework

On 3 December 2020, the European Banking Authority (EBA) published final draft regulatory technical standards (RTS) on how institutions are to calculate the own funds requirements for foreign-exchange and commodity risk stemming from banking book positions under the Fundamental Review of the Trading Book (FRTB) standardised and internal model approaches. The EBA has prepared the … Continue Reading

Corrigenda to IFR and IFD

On 2 December 2020, there was published in the Official Journal of the EU the following corrigenda to the Investment Firms Regulation and Investment Firms Directive: Corrigendum to Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No … Continue Reading

Capital treatment of securitisations of non-performing loans

On 26 November 2020, the Basel Committee on Banking Supervision published a technical amendment ‘Capital treatment of securitisations of non-performing loans’. The technical amendment closes a gap in the Basel framework by setting out prudent and risk sensitive capital requirements for non-performing loan securitisations. The Basel Committee has agreed to add the following elements to … Continue Reading

EBA analyses effect of the unwind mechanism of the liquidity coverage ratio

On 19 November 2020, the European Banking Authority (EBA) published a report that provides a discussion about the functioning of the unwind mechanism of the liquidity coverage ratio (LCR). It shows the actual effect of this mechanism over a period covering the most recent years. The analysis is based on common reporting (COREP) of larger … Continue Reading

PRA Dear CFO letter regarding remediation of prudential treatment of legacy instruments before the CRR I transition period ends

On 16 November 2020, the PRA published a Dear Chief Financial Officer (CFO) letter concerning remediation of prudential treatment of legacy instruments before the Capital Requirements Regulation I (CRR I) transition period ends. The Dear CFO letter follows an earlier opinion from the European Banking Authority on the prudential treatment of legacy instruments, and communicates … Continue Reading

EBA publishes the methodology for the 2021 EU-wide stress test

On 13 November 2020, the European Banking Authority (EBA) published its final methodology, draft templates and template guidance for the 2021 EU-wide stress test along with the key milestones of the exercise. The methodology and templates include some targeted changes compared to the postponed 2020 exercise, such as the recognition of foreign exchange effects for … Continue Reading

Prudential treatment of software assets – new Commission Delegated Regulation

On 12 November 2020, the European Commission updated its webpage for implementing and delegated acts under the Capital Requirements Regulation (CRR). The update provides that the prudential treatment of certain software assets was revised by Regulation (EU) 2019/876, in order to further support the transition towards a more digitised banking sector. Regulation 2019/876 introduced Article … Continue Reading
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