EBA published an updated risk dashboard for the third quarter of 2017, along with the results from the Risk Assessment Questionnaire. The dashboard identified ongoing improvements in the repair of the EU banking sector, in addition to the residual risks in non-performing loans (NPLs) and bank profitability.
The risk dashboard shows that EU banks continued to strengthen their capital ratios in the third quarter. The common equity tier 1 (CET1) ratio experienced an increase of 30 basis points, from 14.3% in the second quarter of 2017 to 14.6% in the third quarter of 2017. The ratio of NPLs kept a modest downward trend, decreasing by 30 basis points to 4.2%. Profitability indicators have improved slightly but sustainable returns remain elusive for many banks. The loan-to-deposit ratio continued to decrease and the leverage ratio remained broadly stable. The figures included in the dashboard are based on a sample of 152 banks, covering more than 80% of the EU banking sector (by total assets), at the highest level of consolidation, while country aggregates may also include large subsidiaries. The analysis used quantitative risk indicators, along with the opinions of banks and market analysts from the EBA Risk Assessment Questionnaire.
On the future of the funding of banks in the EU, results of the EBA Risk Assessment Questionnaire suggest that banks are expected to attain more instruments eligible for Minimum Requirement for Own Funds and Eligible Liabilities (MREL), even though they consider uncertainty on the specific MREL requirements as a constraint to their issuance. The results of the questionnaire also show that cyber risk and data security are considered as the main drivers for increase in operational risk. They are also assumed to be the main factors that might negatively influence market sentiment, along with the uncertainties around the UK's decision to leave the EU.
Related Link: Press Release
Previous ArticleEIOPA Q&A on Regulations: First Update for January 2018
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
The Bank of England (BoE) published questions and answers (Q&A) on OSCA to BEEDS migration for statistical reporting as well a presentation from the project overview session held with statistical reporters.
The Basel Committee on Banking Supervision (BCBS) is consulting on a technical amendment to the Basel Framework to reflect a new process reviewing the global systemically important bank (G-SIB) assessment methodology.