Featured Product

    Andrea Enria of ECB Presents Annual Report on Supervisory Activities

    March 21, 2019

    Andrea Enria, Chair of the ECB Supervisory Board, presented the ECB annual report on supervisory activities for 2018. He presented the annual report to the Economic and Monetary Affairs Committee of the European Parliament. Mr. Enria outlined the supervisory priorities of the Single Supervisory Mechanism (SSM) for 2019 and the ongoing preparations for Brexit. The key topics covered in the annual report include information on implementation of the SSM model of supervision, contribution to the EU crisis management and resolution framework, and organizational setup of ECB banking supervision.

    Mr. Enria examined developments in the banking sector and highlighted the increase in common equity tier 1 ratio of euro area banks, along with decrease in the volume of nonperforming loans (NPLs) on balance sheets of the banks under ECB supervision. He also discussed the comprehensive supervisory framework that directly addresses legacy NPLs and aims to prevent the build-up of new NPLs in the future. He also mentioned that the targeted review of internal models, or TRIM, has helped to form a common understanding, across the SSM, of regulatory requirements related to internal models. Furthermore, it has helped to identify the most common shortcomings of internal models used by significant institutions. While discussing the crisis management framework on which ECB Banking Supervision and SRB have cooperate closely, he mentioned that the early intervention framework needs improvements to enable the supervisor to apply these measures properly. The overlap between supervisory and early intervention measures should be removed and the early intervention powers of ECB should be given a legal basis in the form of a regulation, with a view to limiting the legal uncertainty linked to different national implementation laws.

    Next, he outlined the supervisory priorities for 2019. First, in the area of credit risk, ECB Banking Supervision will continue to promote the reduction of the stock of NPLs. Furthermore, as part of a new initiative, ECB will assess banks’ credit underwriting criteria with a view to avoid excessive risk-taking by banks. The quality of specific asset class exposures, such as commercial real estate, residential real estate, and leveraged finance, will be closely examined. Second, with regard to risk management, the TRIM review will continue. ECB Banking Supervision will also continue to push for improvements to banks’ internal processes for capital and liquidity adequacy—the ICAAP and ILAAP processes, respectively. The supervisory stress test this year will also assess the resilience of banks to liquidity shocks, while new measures will be taken to examine IT and cyber risks. Finally, supervisory activities planned for 2019 include work related to trading risk and asset valuations as well as the preparations for Brexit.

    He mentioned that Brexit has been a supervisory priority for ECB over the past two years. However, considerable uncertainty still exists on the next steps in the negotiation process and it appears that a hard Brexit is still not off the table. As part of the supervisory strategy, ECB is closely working with the UK authorities to agree on a solid post-Brexit cooperation framework. EBA has successfully coordinated the preparation of a template supervisory cooperation MoU for all EU authorities to be used bilaterally with UK authorities. In addition to this MoU that covers aspects, such as information exchange and the reciprocal treatment of cross-border banking groups, ECB Banking Supervision and PRA have also agreed on a split of supervisory responsibilities in relation to branches’ supervision. He finally mentioned that the first five years of European banking supervision have leveled the playing field for banks in the euro area and strengthened the resilience of banking sector. However, additional work still needs to be done.


    Related Links

    Keywords: Europe, EU, Banking, TRIM, Banking Supervision, Brexit, Internal Models, Supervisory Activities, Annual Report, ECB

    Related Articles
    News

    HKMA on Fintech Adoption and Innovation by Banks in Hong Kong

    HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.

    May 20, 2020 WebPage Regulatory News
    News

    BIS on Impact of Increasing Use of Cloud Technology on Cyber Risk

    BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guide for Managing Climate and Environmental Risks

    ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Issues Opinion on Revisions to CRR in Response to COVID Crisis

    ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.

    May 20, 2020 WebPage Regulatory News
    News

    EBA Assesses Interlinkages Between Recovery and Resolution Planning

    EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).

    May 20, 2020 WebPage Regulatory News
    News

    SRB Publishes Final MREL Policy Under the Banking Package

    SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.

    May 20, 2020 WebPage Regulatory News
    News

    US Agencies Amend Interim Final Rule on Transition Period for CECL

    US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.

    May 19, 2020 WebPage Regulatory News
    News

    ECB Releases Results of March Survey on Credit Terms and Conditions

    ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.

    May 19, 2020 WebPage Regulatory News
    News

    FINMA Adjusts Deadlines for COVID-19 Relief Measures for Banks

    FINMA published guidance (06/2020) on extending or discontinuing various exemptions that were granted due to the COVID-19 crisis.

    May 19, 2020 WebPage Regulatory News
    News

    SRB Consults on Standardized Data Set for Bank Valuation in Resolution

    SRB launched a consultation on the minimum data needed for valuation of a bank in resolution.

    May 19, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5203