General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
July 31, 2017

EBA published two reports on funding plans and asset encumbrance of EU banks. The results of the assessment show that banks plan to increase their lending and expand deposits as well as market-based funding. The funding plans of banks paint an optimistic outlook for growth while nonperforming loans (NPLs) remain a drag on EU banks new lending. The two reports shall be published on an annual basis.

The report on funding plans of EU banks highlights that the forecasted loan growth is to be funded by client deposits and issuance of long-term debt. EBA had asked 155 banks for their plans for funding over three years to 2019. These plans show that, on an average, total assets are projected to grow by 3.9% between 2016 and 2019, driven by loans to households and non-financial corporates. Further analysis suggests that high NPL levels, combined with more thinly capitalized banks, could be a drag on new lending, unless addressed. Client deposits remain the main component in EU banks' funding mix with a share of more than 50%. Banks forecast an expansion of deposits at both an individual and system level. Planned issuances of debt securities in 2017 also looks set to increase in 2018 and 2019. The plans suggest that the share of covered bonds as a source of asset encumbrance will continue its rising trend. The outlook for funding plans should be seen in the context of the need to issue further minimum requirements for eligible liabilities (MREL) and the wind down of central banks' funding support measures. Amid such trends, banks' forecasted reliance on interest income to improve profitability will require careful monitoring.


The asset encumbrance report, which is backward-looking (based on data for from December 2014 to December 2016), shows that, in December 2016, the overall weighted average encumbrance ratio stood at 26.6%, against 25.4% in December 2015. However, the report highlights a wide dispersion across institutions and countries, which is consistent with what was observed in the previous report. Besides covered bonds, the main sources of asset encumbrance are repos and over-the-counter derivatives. Some countries, particularly those affected by the sovereign debt crisis, showed a decreased dependence toward the use of central bank funding, which could reflect a general improvement of the funding situation in these countries.


Related Links

Report on Asset Encumbrance (PDF)

Report on Funding Plans (PDF) 

EBA Thematic Reports

Keywords: Europe, EU, Banking, Asset Encumbrance, Funding Plan, NPLs, EBA

Related Articles

EBA Publishes Reports Monitoring the Implementation of Basel III in EU

EBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU.

March 20, 2019 WebPage Regulatory News

BCBS Publishes Results of Survey on Proportionality in Bank Regulation

BCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.

March 19, 2019 WebPage Regulatory News

US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy Swaps

US Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.

March 19, 2019 WebPage Regulatory News

EIOPA Requests Data on LTG Measures from Insurers Under Solvency II

EIOPA has requested the European Economic Area insurance undertakings, which are subject to Solvency II, to provide information on the long-term guarantee (LTG) measures.

March 18, 2019 WebPage Regulatory News

PRA Proposes Reporting Amendments to Pillar 2 Liquidity Framework

PRA proposed (CP6/19) regulatory reporting amendments and clarifications to the Pillar 2 liquidity framework for banks in UK.

March 18, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: Third Update for March 2019

EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.

March 15, 2019 WebPage Regulatory News

OCC Updates Recovery Planning Booklet of the Comptroller's Handbook

OCC updated the Recovery Planning booklet of the Comptroller’s Handbook.

March 15, 2019 WebPage Regulatory News

CFTC and MAS Announce Mutual Recognition of Derivatives Trading Venues

CFTC and MAS announced the mutual recognition of certain derivatives trading venues in the U.S. and Singapore.

March 15, 2019 WebPage Regulatory News

EBA Publishes Report on Convergence of Supervisory Practices Across EU

EBA published annual report on the convergence of supervisory practices in EU.

March 14, 2019 WebPage Regulatory News

CPMI-IOSCO Publish Update to Level 1 Assessment of PFMI Implementation

CPMI and IOSCO jointly updated the Level 1 Assessment Online Tracker on monitoring of the implementation of the Principles for financial market infrastructures (PFMI).

March 14, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2763