EBA Sets Out Recommendations to Reduce Supervisory Reporting Costs
EBA published a report that sets out 25 recommendations for reducing the compliance costs associated with supervisory reporting requirements, primarily for small and non-complex institutions. EBA identified the recommendations collectively, leading to a potential reduction of up to 15%-24% in the reporting costs of banks. The recommendations will improve reporting requirements and processes for all institutions while retaining the end-user benefits of the single supervisory framework. The recommendations address four broad areas: changes to the development process for the EBA reporting framework, changes to the design of EBA supervisory reporting requirements and reporting content, coordination and integration of data requests and reporting requirements, and changes to the reporting process, including the wider use of technology.
Under the Capital Requirements Regulation, EBA is mandated to measure the costs institutions incur when complying with the reporting requirements set out in the implementing technical standards on supervisory reporting. EBA is also asked to assess whether these reporting costs are proportionate with regard to the benefits delivered for the purposes of prudential supervision and make recommendations on how to reduce the reporting cost at least for small and non-complex institutions. Following are some of the key recommendations in the EBA report:
- Better signposting of the requirements, including the reporting requirements, applicable to different groups of institutions
- Seeking greater stability into EBA supervisory reporting requirements and providing longer implementation period for the changes into the reporting requirements
- Introducing better articulation and explanation and providing examples and better instruction (including, where possible in machine readable format) to help institutions with the implementation of the reporting requirements
- Streamlining liquidity reporting (additional liquidity monitoring metrics) and excepting small and non-complex institutions from reporting certain templates
- Introducing changes to reporting large exposures, leverage ratio, and net stable funding ratio
- Investigating ways to enable simplified consolidated reporting for the groups that consist of entities benefitting from the simplified reporting requirements
- Improving and further simplifying the reporting on asset encumbrance, including considering exempting small and non-complex institutions from certain reporting
- Reviewing asset encumbrance definition to create the level playing field between entities applying different accounting standards
- Reviewing the scope of application and frequencies of the reporting templates identified as least important and less frequently used by supervisors
- Adopting a "core + supplement" approach when designing new reporting requirements and revising existing requirements, where feasible
The report also identified the need to remove barrier to the wider adoption of fintech and regtech solutions by institutions as well as the need to promote better digitalization of the institutions’ internal documents and contracts. The report identifies potential benefits of better data integration, including the integration between supervisory reporting and public disclosures, integration and better internal risk data aggregation within the institutions, and promoting the EBA work on integrated reporting. EBA will incorporate the recommendations into its work program and implement them as part of the ongoing work, according to the availability of internal resources. Certain recommendations would lead to specific policy products that will follow the usual policy development process, which includes seeking industry and other stakeholders’ views through the public consultation process. EBA also plans to continue its work on making the reporting process more efficient for all stakeholders, through its work on the feasibility study of integrated reporting.
Related Links
Keywords: Europe, EU, Banking, Reporting, CRR, Basel, Proportionality, Fintech, Regtech, Compliance Risk, Liquidity Risk, Credit Risk, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous Article
EBA Proposes Rules on Calculation of Threshold for Investment FirmsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.