Featured Product

    ECB to Phase Out Collateral Measures, Restrict Business of RCB Bank

    March 24, 2022

    The European Central Bank (ECB) announced its decision to phase out pandemic-induced temporary collateral easing measures by March 2024, along with certain decisions related to the RCB Bank phasing out its banking operations.

    The collateral easing measures will be phased out in the following three steps while ECB will continue to waive minimum credit quality requirement for Greek government bonds, allowing national central banks to accept them as collateral in line with continued eligibility in pandemic emergency purchase program (PEPP):

    • In Step 1 of the collateral easing measures, ECB will implement set of decisions from July 08, 2022: temporarily reduce collateral valuation haircuts across all assets from the current 20% adjustment to 10%; discontinue maintaining the eligibility of marketable assets that fulfilled minimum credit quality requirements; restore the limit with respect to unsecured debt instruments issued by any single other banking group in a credit institution’s collateral pool from 10% to 2.5%; and phase out technical requirements for the eligibility of additional credit claims, mainly relating to fully restoring the frequency of the additional credit claims loan level reporting requirements and the acceptance requirements for banks’ own credit assessments from internal rating-based systems.
    • In Step 2, ECB expects to implement a new valuation haircut schedule based on its pre-pandemic risk tolerance level for credit operations, phasing out the remaining general 10% reduction in collateral valuation haircuts by June 2023.
    • In Step 3, ECB plans to phase out the remaining pandemic collateral easing measures by March 2024, following a comprehensive review of the additional credit claims frameworks; the review will take into account counterparties’ collateral needs for their continued participation in the outstanding targeted longer-term refinancing operations (known as TLTRO III) operations until December 2024.

    As part of the decision on RCB Bank, ECB has decided to

    • grant RCB Bank permission to sell a part of its performing loan portfolio to Hellenic Bank Public Company Ltd. RCB Bank requested ECB approval after both entities agreed on the sale. According to RCB Bank’s voluntary phasing-out plan, the sales operation will ensure it has enough liquidity to repay its clients’ deposits in full.
    • restrict the bank’s business to avoid risks emerging during the bank’s phasing-out process. Therefore, RCB Bank will not be able to accept new deposits, grant new loans, or make new investments.
    • appoint a temporary administrator to closely monitor RCB Bank’s liquidity position and capital position and to oversee the orderly repayment of its depositors. The temporary administrator will not replace the current management body, but instead work with it and support the orderly implementation of the bank’s voluntary phasing-out plan.

     

    Related Links

     

    Keywords: Europe, EU, Banking, Covid-19, Basel, Credit Risk, PEPP, TLTRO III, RCB Bank, Liquidity Risk, Collateral Framework, Counterparty Risk, Resolution Framework, ECB

    Featured Experts
    Related Articles
    News

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks

    May 20, 2022 WebPage Regulatory News
    News

    NGFS Report Explores Quantification of Climate Risk Differentials

    The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations

    May 19, 2022 WebPage Regulatory News
    News

    EC Publishes Results on Review of Web Accessibility Directive

    The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.

    May 19, 2022 WebPage Regulatory News
    News

    MAS Consults on Adjustment Spreads for Conversion of SOR Contracts

    The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.

    May 18, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8206