EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR). These standards are intended to ensure that the appropriate method of prudential consolidation is applied for the calculation of CRR requirements on a consolidated basis. As per EBA, entities to be included in the scope of prudential consolidation are financial institutions (as defined in point 26 of Article 4(1) of CRR) and ancillary services undertakings (as defined in point 18 of Article 4(1) of CRR).
These final draft regulatory technical standards specify the conditions for the application of the different methods of prudential consolidation. The regulatory technical standards have taken into consideration the BCBS guidelines on the identification and management of step-in risk and, therefore, include several indicators that should be assessed in order to identify the undertakings that can lead to step-in risk. Following the approval of the Risk Reduction Measures Package, the draft regulatory technical standards have been revised to reflect the changes introduced in the CRR and in the Capital Requirements Directive (CRD) as well as the feedback received during the public consultation. The main changes deal with the newly introduced Article 18(8) of the CRR, allowing competent authorities to extend prudential consolidation to certain non-financial undertakings in case there is a substantial risk of step-in. In this regard, building on the initial proposal presented in the consultation paper, these draft regulatory technical standards include several step-in risk indicators to be considered by competent authorities in assessing whether an undertaking should be fully or proportionally consolidated for prudential purposes.
Keywords: Europe, EU, Banking, CRR, Basel, Step-in Risk, Prudential Consolidation, Regulatory Technical Standards, Proportionality, Risk Reduction Package, EBA
Previous ArticleDNB and AFM Consult on Regulation on Sound Remuneration Policies
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
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.