Featured Product

    Danièle Nouy of ECB on Banking Package on Risk Reduction in Europe

    June 19, 2017

    Danièle Nouy, Chair of the Supervisory Board of ECB, gave introductory statement to the European Parliament’s Economic and Monetary Affairs Committee in Brussels. She addressed the key issues in the area of banking supervision in Europe, including the issue of nonperforming loans (NPLs) and the supervisory implications of Brexit. She also discussed crucial issues in the risk-reduction package that is under discussion in the Council and in the Parliament.

    With regard to NPLs, she mentioned that ECB is looking into more forward-looking solutions to avoid any build-up of NPLs. "We have highlighted the need to strengthen such powers already to the Commission and the Council and to your Committee most recently during the hearing on the banking legislation package in May." Addressing the issue of NPLs requires determined action from all stakeholders, not only supervisors. Next, she discussed the preparations for Brexit. “First, we are making sure that euro area banks, in particular those with subsidiaries or branches in the UK but also those with other business ties to the country, have adequate contingency plans in place and are preparing for the possibility of a 'hard Brexit.' Second, within the ECB, we are preparing for all operational aspects related to a possible relocation of UK-based banks to the euro area.” The ongoing CRR/CRD review offers an opportunity to legislators for closing the existing loopholes and enhancing supervisory convergence, added Ms. Nouy.

     

    Post this, she discussed, from the supervisory perspective, the key issues with the banking legislation package. She explained the need to fast-track the provisions introducing a transitional framework for IFRS 9 and expressed her concern to the EC proposal and the ECON Committee draft report, which would make the transitional arrangements much more complex and burdensome. "This approach would de facto postpone the entry into force of the whole IFRS 9 framework, as it would require banks to continue calculating their provisions and making subsequent adjustments to CET1 [common equity tier 1] capital according to the previous accounting standard for the entire transition period," highlighted Ms. Nouy. She added that the risk-reduction proposal does not provide for an adequate harmonization of certain key supervisory tools at the EU level. She also thinks that "much more progress" should be made in harmonizing member states’ national options and discretions and that supervisors should retain the flexibility and discretion to apply regulations with proportionality. In her view, "it is preferable not to create a separate regulatory framework for small banks." In conclusion, she reinforced that “By continuing intensive work on our supervisory priorities, ECB Banking Supervision is contributing to the mitigation of existing risks and enhancing the soundness of the euro area banking system.”

     

    Related Link: Speech

    Keywords: ECB, Europe, EC, Brexit, Banking, NPL, IFRS 9

    Featured Experts
    Related Articles
    News

    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

    March 20, 2024 WebPage Regulatory News
    News

    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.

    March 18, 2024 WebPage Regulatory News
    News

    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

    March 18, 2024 WebPage Regulatory News
    News

    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.

    March 07, 2024 WebPage Regulatory News
    News

    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

    March 05, 2024 WebPage Regulatory News
    News

    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).

    February 28, 2024 WebPage Regulatory News
    News

    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.

    February 28, 2024 WebPage Regulatory News
    News

    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.

    February 26, 2024 WebPage Regulatory News
    News

    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.

    February 23, 2024 WebPage Regulatory News
    News

    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.

    February 23, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8957