ESRB published its updated risk assessment via a risk dashboard for this quarter, along with a summary of the March 2021 meeting of the General Board of ESRB. At the meeting, the Board highlighted that full and timely implementation of Basel III remains a priority, discussed the impact of COVID-19 pandemic on financial stability in EU, and focused on ways to address the issues stemming from the pandemic. ESRB announced that it will publish, in Spring, a note highlighting the broad issues related to corporate insolvencies as well as a report summarizing ESRB analysis on macro-prudential policy issues. The General Board also noted that the evidence already gathered could be a starting point for a discussion on improving the macro-prudential buffer framework in the medium term, with a view to contributing to the EC review of the macro-prudential policy framework in 2022.
The following are the other key highlights of the discussions at the meeting:
- The General Board reiterated that the main source of systemic risk in EU originated from the impact of the pandemic and highlighted that, to help rebuild the economy, the current public support measures need to become more targeted as the crisis evolves. The Board saw merit in increasingly complementing liquidity support with equity support, possibly including quasi-equity and subsidies, for viable but overindebted firms, noting that success in containing solvency pressures in the non-financial corporate sector was crucial for minimizing the spillover effects of the COVID-19 crisis on the financial sector.
- The General Board supported the call by micro-prudential banking supervisors to proactively identify and provision for non-performing loans (NPLs) and enhance their organizational capacity for NPL resolution. Member states should identify a set of options to facilitate the process of assessment and, where warranted, restructuring of the debt of viable but overindebted firms to enhance firms’ debt repayment capacity.
- The General Board called on member states to review and, where necessary, improve insolvency and collateral enforcement procedures and strengthen the capacity of the judiciary in order to avoid bottlenecks.
- The General Board discussed macro-prudential policy issues and assessed risks related to broad-based risk-taking, the sustainability of business models, and structural changes in the financial system. It highlighted the four main areas of concern: the profitability and resilience of banks, the indebtedness and viability of borrowers, systemic liquidity risk, and the sustainability of the business models of insurers and pension funds offering longer-term return guarantees.
Keywords: Europe, EU, Banking, COVID-19, NPLs, Basel, Regulatory Capital, Systemic Risk, Credit Risk, Risk Dashboard, Macro-Prudential Policy, ESRB
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.