EBA Opines on EC-Proposed Changes to Own Funds & Eligible Liabilities
The European Banking Authority (EBA) issued an opinion on amendments proposed by the European Commission to the draft regulatory technical standards for own funds and eligible liabilities.
In the opinion, EBA expressed its disagreement with two substantive changes proposed by the European Commission to the draft regulatory standards for own funds and eligible liabilities, though it agrees with certain other amendments that do not imply a change in policy and represent non-substantive changes. The amendments with the substantive changes relate to the provisions covering the notions of direct and indirect funding and the prior permission process for certain types of liquidation entities.
In relation to provisions covering direct and indirect funding, EBA clarified that the direct and indirect funding rules should capture situations where the funding is provided by an entity included in the scope of prudential or accounting consolidation, regardless of whether it involves an external investor or not. The rules ensure that entities issue actual loss-absorbing capacity and prevent them from issuing instruments that might eventually expose them to their own losses. EBA also clarified that the rules are not meant to prevent normal banking transactions between a parent and its subsidiaries or between entities belonging to the same accounting or prudential group (intragroup transactions) and such undesired effect has not been reported under the regulatory technical standards on own funds. EBA states that the draft technical standards already contain, from a supervisory perspective, the necessary principles or tools needed for capturing all cases of direct or indirect funding.
In relation to the prior permission regime for liquidation entities, EBA clarified its intention to avoid an unnecessary administrative burden for resolution authorities and liquidation entities. EBA provides resolution authorities with the opportunity to grant a general prior permission for certain liquidation entities, based on the information that is already available to them for the purpose of drawing up the resolution plan. While following a risk-based approach, under which institutions with a similar risk profile could be subject to a similar decision, the resolution authority can still, on a case-by-case basis, determine the limit of or even decide not to grant a general prior permission. Hence, EBA considers that its final draft regulatory technical standards designed a prior permission regime proportionate to the goals of the regulation and is of the opinion that no change is warranted.
Related Links
Keywords: Europe, EU, Banking, Regulatory Technical Standards, Own Funds, MREL, CRR, BRRD, TLAC, Eligible Liabilities, Basel, Regulatory Capital, EBA, EC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
APRA to Delay Revisions to Prudential Standard on Public DisclosuresRelated Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
EC Publishes Results on Review of Web Accessibility Directive
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
NGFS Report Explores Quantification of Climate Risk Differentials
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
MAS Consults on Adjustment Spreads for Conversion of SOR Contracts
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
