The European Banking Authority (EBA) published the Consolidated Annual Activity Report and the annual report detailing its activities and achievements; the annual report also outlines the key priorities for 2022. The key strategic priorities for the coming year cover review of stress-testing framework, implementation of mandates in the area of anti-money laundering/countering the financing of terrorism (AML/CFT), initiatives on financial innovation and sustainable finance, and assessment of the impact of Ukraine war and COVID-19 pandemic on the banking sector in European Union (EU).
The key priorities for 2022 are summarized below:
- Intended publication, by EBA, of the guidelines on interest rate risk in the banking book (IRRBB) and credit spread risk in the banking book (CSRBB), the draft regulatory technical standards on the IRRBB standardized approach, and the draft regulatory technical standards on IRRBB supervisory outlier tests.
- Publication, by EBA and the European Securities and Markets Authority (ESMA), of the final joint guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) by July 2022.
- Issuance of a proposal, by EBA, to revise the guidelines on methods for calculating contributions to Deposit Guarantee Schemes in the second quarter of 2022; this ongoing review of the guidelines is intended to assess whether the risk-based method outlined in the guidelines provides adequate risk-differentiation between institutions and to identify practical issues or obstacles in the application of the current framework.
- Publication by EBA, in the first of half of 2022, of the final drafts of the regulatory technical standards on risk retention, the implementing technical standards on the mapping of external credit assessment institutions (ECAIs) credit assessment for securitization positions, and the regulatory technical standards on triggers for switching the amortization system in simple, transparent, and standardized (STS) synthetic securitization.
- Preparation for the 2023 EBA stress test and introduction of targeted changes to the stress testing approach: first change under consideration is the enlargement of the sample to include a broader risk coverage at the EU level and a wider geographical representation; second targeted change involves the gradual introduction of a hybrid framework in which top-down and bottom-up methods applied to different risk areas would coexist; and the third consideration involves one of the priorities for 2022 to discuss how to best include climate risk in a stress test framework.
- Revision of supervisory reporting framework in 2022 and finalization of the reporting framework 3.3. These requirements will integrate monitoring of the threshold and other procedural aspects on the establishment of the Intermediate Parent Undertaking and in addition, will include the regular update to the benchmarking implementing technical standards and a comprehensive review of the implementing technical standards on resolution planning.
- Initiation of work on the new interest rate risk in the banking book (IRRBB) reporting framework, building on the new policy package that is being developed and Pillar 3 disclosures on IRRBB.
- Enhancement of market discipline and the use of Pillar 3 information facilitating centralized access by becoming a hub of Pillar 3 disclosures for the European Economic Area credit institutions. The Pillar 3 data hub is intended to become operational by the fourth quarter of 2024, with institutions starting to report the data in January 2025.
- Preparation for the regulatory and oversight mandates under the Digital Operational Resilience Act (DORA) as well as for the regulatory and potential supervisory mandates under markets in crypto-assets (MiCA).
- Partnering with other European Supervisory Authorities (ESMA and EIOPA) and the European Commission to establish the flagship Supervisory Digital Finance Academy in EU, with the Academy aimed to help supervisors across EU to obtain knowledge on innovative applications of technology to financial services and activities.
- Completion of the AML/CFT policy framework, with guidance on topical issues including on the role of AML/CFT compliance officers, the use of remote customer onboarding solutions, de-risking, and financial inclusion. Identification, assessment, and dissemination of information about money laundering and terrorist financing risks based on information from EBA’s new, central, AML/CFT database, its "colleges" monitoring activity, and its assessments of the national authorities approaches to AML/ CFT supervision.
- Begin development of an environmental, social, and governance (ESG) risk monitoring framework and explore integration and new assessment, post initiation of the first integration of ESG-related aspects into the existing risk-monitoring framework via the risk assessment questionnaire. Performing of preparatory work to provide further guidance to institutions on the assessment and management of ESG risks.
- Monitoring of the evolution of asset quality, assessment of the regulatory COVID-19-related support programs, and maintenance of the COVID-19 reporting and disclosures requirements.
Keywords: Europe, EU, Banking, Annual Report, Stress Testing, Investment Firms, Securitization, IRRBB, Sustainable Finance, DORA, Regtech, Covid-19, Regulatory Capital, Disclosures, Basel, SREP, ESG, Work Priorities, EBA, EC
Previous ArticleEIOPA Submits Draft Changes to SII Reporting and Disclosures
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.