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

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    News

    HM Treasury Announces G7 Agreement on Green Agenda Ahead of COP26

    HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6821