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

    BoE Clarifies Approach to Treatment of Payment Holidays on Form PL

    BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.

    August 11, 2020 WebPage Regulatory News
    News

    BoE Provides Reporting Update on Form AS and Form FV

    BoE updated the known issues document for the statistical reporting Forms AS and FV.

    August 10, 2020 WebPage Regulatory News
    News

    FED Announces Capital Requirements for Large Banks

    FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.

    August 10, 2020 WebPage Regulatory News
    News

    SRB Publishes Guidance on Implementation of Bail-In Tool

    SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.

    August 10, 2020 WebPage Regulatory News
    News

    BIS Publishes Update on G20 TechSprint Initiative

    BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.

    August 10, 2020 WebPage Regulatory News
    News

    OSFI Provides Update on Implementation of IFRS 17 in Canada

    OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.

    August 07, 2020 WebPage Regulatory News
    News

    EBA Provides Clarity on Implementation of Guidance on COVID Reporting

    EBA updated the report on the implementation of selected COVID-19 policies.

    August 07, 2020 WebPage Regulatory News
    News

    FSI Note Discusses Challenges Associated with COVID Relief Measures

    The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.

    August 06, 2020 WebPage Regulatory News
    News

    BCBS Consults on Principles for Operational Risk and Resilience

    BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.

    August 06, 2020 WebPage Regulatory News
    News

    BoE Updates Template and Definitions for Form ER

    BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.

    August 05, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5650