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    EBA Proposes to Update Methodology for Identification of G-SIIs

    March 05, 2020

    EBA launched a consultation to update the identification methodology of global systemically relevant institutions (G-SIIs) and related capital buffer rates. EBA is proposing to update regulatory technical standards on the identification methodology for G‐SIIs and implementing technical standards on Pillar 3 disclosure of indicators for global systemically important banks (G‐SIBs). The proposal also covers updated guidelines on the specification, reporting, and disclosure of indicators of global systemic importance. The consultation closes on June 05, 2020.

    Following Article 441 of the revised Capital Requirements Regulation or CRR2, institutions identified as G‐SIIs are required to disclose, on an annual basis, the values of the indicators used for determining their score in accordance with the identification methodology referred to in Article 131 of CRD5. Article 434a of the CRR2 includes the mandate for EBA to develop draft implementing technical standards specifying uniform disclosure formats and associated instructions in accordance with which the disclosures required under Titles II and III of Part Eight of the CRR shall be made, including the disclosure required in Article 441. For practical reasons, data instructions for indicator values and detailed template specifications are included in the guidelines. Updates of such instructions and specifications will be published annually and should be considered by all groups and institutions exceeding EUR 200 billion of exposure measure, including insurance subsidiaries.

    The two factors that prompted the need for this update are the revised G-SIB framework published by BCBS in July 2018 and the recent mandate given to EBA to draft an additional methodology for the allocation of G-SII buffer rates to identified G-SIIs. The proposed standards and guidelines have been developed in accordance with the Capital Requirements Directive (CRD5 or Directive 2019/878) and on the basis of internationally agreed standards, such as the framework established by FSB and the standards developed by BCBS. The identification as G-SII, which leads to higher additional capital requirements, takes place in December every year. The higher additional capital requirement applies one year after the publication, by competent authorities in each member state, of banks' scoring results to allow institutions enough time to adjust to the new buffer requirement.

    The draft regulation and implementing technical will be submitted to EC for endorsement, following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union. The guidelines will then be translated into the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations.

     

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    Comment Due Date: June 05, 2020

    Keywords: Europe, EU, Banking, Basel III, CRR/CRD, Systemic Risk, G-SII, G-SIB, Disclosures, Reporting, Pillar 3, EBA

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