FIN-FSA amended regulations and guidelines 6/2014 on the reporting of funding plans and these will be effective from December 31, 2020. The regulations and guidelines have been amended to incorporate the updated EBA guidelines on harmonized definitions and templates for funding plans of credit institutions (EBA/GL/2019/05). Additionally, the FIN-FSA Board decided, at a meeting on June 29, 2020, that the countercyclical capital buffer (CCyB) requirement will remain at 0%. Considering the challenges posed by the COVID-19 pandemic, the FIN-FSA Board also decided that the maximum loan-to-collateral ratio will be adjusted and brought back to the statutory standard level of 90%. The Board also repealed its decision of March 28, 2018 on the reciprocation of the systemic risk buffer of 1.0% imposed by Bank of Estonia (Eesti Pank) on June 30, 2016. Finally, FIN-FSA is requesting all entities under the preparedness obligation to draw up an entity-specific preparedness plan and submit the plan to FIN-FSA by December 31, 2020.
Amendments to FIN-FSA Regulations and Guidelines on Reporting of Funding Plans
In the updated EBA guidelines (EBA/GL/2019/05) on reporting of funding plans, the definitions and breakdowns have been aligned with those used in FINREP reporting. The guidelines introduce a more detailed breakdown of market-based funding according to seniority, along with certain simplifications for small and non-complex institutions to enhance proportionality. According to the updated guidelines, the first reporting reference date is December 31, 2020, with the deadline for submitting the reports set for March 15, 2021. The FIN-FSA regulations and guidelines have been revised as follows:
- Paragraph (1) of section 2.2 referring to the EBA guidelines on the reporting of funding plans (EBA/GL/2019/05) has been amended, and a new paragraph (2) has been added to the section.
- A new section 2.3 on the decision of ECB has been added, and as a result the numbering of section 2.4 has changed.
- The reporting period under paragraph (4) of section 3.1 has been changed. It states that supervised entities shall submit the data collection concerning funding plans in accordance with the EBA guidelines (EBA/GL/2019/05) on an annual basis. Credit institutions shall submit the reports on their funding plans in accordance with these guidelines by March 15, with the reporting reference date being December 31 of the previous year.
The FIN-FSA regulations and guidelines 6/2014 apply to credit institutions which are identified as significant institutions in accordance with the criteria provided in the Regulation on the Single Supervisory Mechanism (SSM Regulation) and the SSM Framework Regulation, and which hence fall within the scope of direct supervision by ECB. This scope of application fulfills the recommendation of the ESRB that the data collection be applied to credit institutions covering at least 75% of the banking system’s total consolidated assets.
FIN-FSA is requesting all entities under the preparedness obligation to draw up an entity-specific plan on how to ensure or intend to ensure the operability of critical services from an end-customer to an end-customer in circumstances where foreign service provision is completely unavailable. FIN-FSA announced that the Ministry of Finance is developing a regulation on the preparedness of the financial markets to be more unambiguous and better aligned with the requirements of the current operating environment. The entity-specific plan must describe, for example, how it is ensured that the payer is able to submit a payment order to its payment service provider and how the payment service provider processes the payment and transfers the payment to the payee's payment service provider and on to the payee's account. The plan must be based on a scenario where no inter-entity or entity-internal payment or securities system, function or data warehouse located abroad is available for months. The preparedness plan must be clear and detailed enough to enable the assessment of its feasibility and regulatory compliance. If the report includes actions to be taken in the future, their schedule and content must be presented in exact terms. The plans submitted to the FIN-FSA will be assessed by financial market authorities responsible for preparedness issues—that is, the Ministry of Finance and the Bank of Finland together with the FIN-FSA.
- Press Release on Amendments to Regulations and Guidelines 6/2014
- Press Release on Macro-Prudential Decisions
- Press Release on Preparedness Plans
- Regulations and Guidelines 6/2014 (PDF)
- EBA Guidelines on Reporting of Funding Plans
- Decision on CCyB and Maximum LTC Ratio (PDF)
Keywords: Europe, Finland, Banking, Securities, COVID-19, Reporting, Funding Plans, FINREP, Proportionality, CCyB, Loan to Collateral Ratio, Macro-Prudential Instruments, Credit Risk, Systemic Risk Buffer, Preparedness Plan, Operational Risk, Eesti Pank, Basel, FIN-FSA
Previous ArticleEBA Provides Clarity on Implementation of Certain COVID-19 Policies
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
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).
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.