The European Banking Authority (EBA) published its risk dashboard for the first quarter of 2022, along with the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ). EBA also adopted a decision on the reporting of payment fraud data by competent authorities under the Payment Services Directive (PSD2).
The Decision on reporting of payment fraud data covers the reporting of aggregated statistical data on fraud from competent authorities in accordance with Article 96(6) of PSD2 and as specified in the EBA Guidelines on fraud reporting, via the European Centralized Infrastructure of Data (EUCLID) and according to the EBA Data Point Model (DPM). The Decision allows the establishment of a streamlined workflow arrangement whereby the European Central Bank (ECB), on behalf of the relevant competent authorities, could submit data to the EBA, in line with the specifications set out in the EUCLID Decision. The competent authorities shall submit the payment fraud data to the EBA on a semi-annual basis, by June 30, for the reporting period ending on December 31 of the previous year, and respectively by December 31 for the reporting period ending on June 30 of the same year.
The risk dashboard for the first quarter of 2022 is based on a sample of risk indicators from 160 banks, covering more than 80% of the European Union/European Economic Area banking sector (by total assets), at the highest level of consolidation, while country aggregates also include large subsidiaries. The analysis of data shows that the liquidity buffers of banks are still abundant despite a decline of the liquidity coverage ratio (LCR). Non-performing loans (NPLs) continued to decrease, but stage 2 loans and cost of risk increased while the return on equity (RoE) declined amid higher impairments and lower positive one-offs. Going forward, market analysts expect higher impairments to offset the positive impact of rising rates in revenues. Furthermore, banks continued to be concerned about cyber risk and operational risk stemming from geopolitical tensions.
The Risk Assessment Questionnaire, which was administered in Spring 2021, saw participation from 60 banks and 11 market analysts. The findings show that due to increasing uncertainty, downward revisions of GDP growth, inflationary pressures, and the monetary policy response, both banks and analysts expected the asset quality, funding costs, and interest margins to be affected. With respect to funding and liquidity, banks intend to continue to rely on minimum requirements for own funds and eligible liabilities (MREL) instruments as well as covered bond funding. Both banks and analysts expect a broad-based deterioration of asset quality. Banks plan to increase lending in segments such as residential mortgages, corporates, and small and medium enterprises (SMEs). With respect to the environmental, social, and governance (ESG) aspects, products linked to green or social objectives are most prominently offered to non-financial corporations different from the small and medium enterprises. Between 55% and 70% of banks are using the European Union taxonomy as the definition for green, depending on the instrument; however, green bonds remain the dominant sustainability-related funding instrument.
- Press Release on Risk Dashboard
- EBA Risk Dashboard (PDF)
- Risk Assessment Questionnaire (PDF)
- Press Release on Decision on Reporting of Payment Fraud Data
- Decision on Reporting of Payment Fraud Data (PDF)
Keywords: Europe, EU, Banking, Risk Dashboard, Credit Risk, PSD2, Risk Assessment Questionnaire, Reporting, Basel, Regulatory Capital, Lending, NPL, Liquidity Risk, MREL, ESG, Green Bonds, Taxonomy, EUCLID, Data Collection, ECB, EBA
Previous ArticleBIS Quarterly Review Discusses Developments in Fintech and ESG Space
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.