Featured Product

    EBA Publishes Impact Assessment Report on Liquidity Coverage Ratio

    December 18, 2017

    EBA published the fourth impact assessment report for the liquidity coverage ratio (LCR). The report shows that banks in the EU have continued to improve their LCR since 2011 and comply with the LCR requirement of 100%, ahead of its full implementation date of January 01, 2018.

    The report shows that the average LCR of EU banks was 139% and the aggregate gross shortfall amounted to EUR 115 million. The increase in the LCR can be mainly attributed to an increase in liquid assets, which, since June 2011, have almost doubled. In contrast, net cash outflows have remained relatively stable. Central bank exposures and central government assets in banks' liquidity buffers continue to be an important component for their compliance with the LCR regulation. This suggests that in the future, banks' short-term liquidity profiles may be affected by the changes in the macroeconomic dynamics. In addition, the report shows that, on average, banks with various business models reach the 100% minimum requirement, despite large dispersions among them

    A more in-depth analysis suggests that the LCR regulation, along with the capital standards and stable funding, have helped banks increase their lending to real economy. The report is based on liquidity data and wider bank balance sheet statistics from 157 EU banks across 16 member states. A further analysis on the banks' wider balance sheet shows that the LCR requirements support lending to real economy and a shortfall in liquidity requirements has a negative impact on bank lending. Overall, liquidity requirements, along with the capital standards and stable funding, increase the resilience of banks' balance sheets and reduce liquidity risk in the banking system. Funding markets reward highly liquid banks and the cost of funding decreases, thus creating further lending opportunities for these banks.

     

    Related Link: Press Release and Report

    Keywords: Europe, EU, Banking, Basel III, LCR, Impact Assessment, EBA

    Featured Experts
    Related Articles
    News

    FSB Publishes List of Global Systemically Important Banks for 2019

    FSB published the 2019 list of global systemically important banks (G-SIBs), using the end-2018 data and an assessment methodology designed by BCBS.

    November 22, 2019 WebPage Regulatory News
    News

    EBA Publishes Roadmap on Risk Reduction Measures Package

    EBA published a set of roadmaps outlining the approach and timelines for delivering the mandates stemming from the Risk Reduction Measures Package adopted by the European Council and European Parliament on May 20, 2019.

    November 21, 2019 WebPage Regulatory News
    News

    EBA Consults on Initial Reporting Requirements for Market Risk

    EBA launched a consultation on the implementing technical standards on supervisory reporting requirements for market risk.

    November 21, 2019 WebPage Regulatory News
    News

    FED Proposes to Extend Initial Compliance Dates Under SCCL Rule

    FED published a proposal to extend, by 18 months, the initial compliance dates for foreign banks subject to the single-counterparty credit limit (SCCL) rule.

    November 20, 2019 WebPage Regulatory News
    News

    CBIRC to Strengthen Supervisory and Policy Support for SME Services

    CBIRC released a notification on strengthening supervision and guidance to enhance the quality and efficiency of financial services for "small and micro-enterprises" (SMEs).

    November 20, 2019 WebPage Regulatory News
    News

    FED Adopts Proposal to Implement Reporting Form for SCCL

    FED adopted a proposal to implement the Single-Counterparty Credit Limits (SCCL) reporting form FR 2590.

    November 20, 2019 WebPage Regulatory News
    News

    APRA Publishes Approach to Regulating and Supervising GCRA Risks

    APRA published an information paper that sets out a more intensive regulatory approach to transform governance, culture, remuneration, and accountability (GCRA) practices across the prudentially regulated financial sector.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Update Rule on Derivative Contracts Exposure Calculation

    US Agencies (FDIC, FED, and OCC) announced a final rule updating the way certain banking organizations are required to measure counterparty credit risk for derivative contracts under their regulatory capital rules.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Amend Treatment of HVCRE Exposures

    US Agencies (FDIC, FED, and OCC) finalized a rule to modify the treatment of high volatility commercial real estate (HVCRE) exposures, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Changes to Rule on Supplementary Leverage Ratio

    US Agencies (FDIC, FED, and OCC) finalized changes to the capital requirement for banking organizations predominantly engaged in custodial activities, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4177