Featured Product

    EBA Outlines Reporting and Disclosure Expectations Amid COVID Outbreak

    March 31, 2020

    In response to the impact of COVID-19 outbreak, EBA published statements that provide guidance on the use of flexibility in supervisory reporting, clarify expectations in relation to dividend and remuneration policies, and outline the necessary measures to prevent money laundering and terrorist financing. EBA provides details on its call for competent authorities to offer leeway on reporting dates, urging one-month flexibility for reports with remittance dates between March and the end of May 2020. However, there has been no delay for reporting in accordance with the reporting framework version 2.9. EBA also called for flexibility in assessing deadlines of Pillar 3 disclosures of institutions and decided, in coordination with BCBS, to cancel the Quantitative Impact Study (QIS) based on June 2020 data.

    In its statement on supervisory reporting, EBA highlighted that, in general, institutions should be allowed up to one additional month for submitting the required data. Each competent and resolution authority should clarify the precise terms for institutions in their jurisdiction. Such exception should not apply to

    • Information on the liquidity coverage ratio (LCR) and the Additional Liquidity Monitoring Metrics (ALMM) and to the data sets identified as priority by the competent or resolution authority. These data should be reported in accordance with the deadlines specified in the applicable reporting standard.
    • Reporting for resolution planning purposes. Information on the liability structure of an institution, including intra-group financial connections, should be reported to resolution authorities by the set date in the applicable reporting standard (April 30, 2020 or earlier if set by the resolution authority).

    From March 2020 onward, the reporting framework version 2.9 will gradually replace its predecessor version 2.8. EBA is of the view that prolonging the application of version 2.8 would not provide a significant relief to institutions or authorities. Reporting in accordance with version 2.9 should therefore start, as envisaged by the adopted Implementing Act amending Regulation, with the reference date March 31, 2020.  EBA also e encouraged competent authorities to be flexible when assessing the institutions’ compliance with the deadlines for the publication of their Pillar 3 reports. The statement adds that the competent authorities and institutions should assess the need for additional Pillar 3 disclosures on prudential information that may be necessary to properly convey the risk profile of the institution in the context of the COVID-19 outbreak. In addition, in its statement on actions to mitigate financial crime risks during the COVID-19 pandemic, EBA calls on competent authorities to support ongoing efforts of financial institutions by sharing information on emerging money laundering and terrorist financing risks, setting clear regulatory expectations, and using supervisory tools flexibly.

    In its statement of dividend distribution and remuneration policies, EBA emphasizes that the capital relief resulting from the measures adopted by competent authorities in response to COVID-19 crisis are to be used to finance the corporate and household sectors and not to increase the distribution of dividends or make share buybacks for the purpose of remunerating shareholders. EBA, acknowledging that some banks have already communicated a postponement of their decisions, urges all banks to refrain from dividend distribution or share buybacks. Banks should revert to their competent authorities in case they consider themselves legally required to pay-out dividends or make share buybacks. EBA also considers that ensuring the efficient and prudent allocation of capital within banking groups is crucial and should be monitored by competent authorities. Furthermore, competent authorities should ask banks to review their remuneration policies, practices, and awards to ensure that they are consistent with, and promote, sound and effective risk management, also reflecting the current economic situation. Remuneration and, in particular, its variable portion should be set at a conservative level. To achieve an appropriate alignment with risks stemming from the COVID-19 pandemic a larger part of the variable remuneration could be deferred for a longer period and a larger proportion could be paid out in equity instruments.

     

    Related Links

    Keywords: Europe, EU, Banking, COVID-19, Reporting, Framework 2.9, Pillar 3, LCR, QIS, Resolution Planning, Disclosures, BCBS, EBA

    Featured Experts
    Related Articles
    News

    APRA Updates Timelines for Revision of Market Risk Standards

    The Australian Prudential Regulation Authority (APRA) released an update on the timelines for revisions to the market risk prudential standards and the implications for the broader capital framework.

    October 27, 2021 WebPage Regulatory News
    News

    BCBS and IOSCO Propose Further Policy Work on Margining Practices

    Three global standard-setters launched a joint consultation that reviews the margining practices during the COVID-19 pandemic and identifies potential areas for further policy work.

    October 26, 2021 WebPage Regulatory News
    News

    BoE Seeks Information Before Migrating Statistical Reporting to BEEDS

    The Bank of England (BoE) published the Statistical Notice 2021/09 requiring additional information from firms and software vendors to assist in the onboarding and testing phases for migrating statistical reporting to the BEEDS portal.

    October 25, 2021 WebPage Regulatory News
    News

    EBA Finalizes Standards on Alternative SA for Market Risk

    The European Banking Authority (EBA) published the final draft regulatory technical standards on gross jump-to-default amounts and on residual risk add-on under the Capital Requirements Regulation or CRR.

    October 25, 2021 WebPage Regulatory News
    News

    FCA Publishes Final Rules on Investment Firms Prudential Regime

    The Financial Conduct Authority (FCA) published the final rules on the Investment Firms Prudential Regime (IFPR) to streamline and simplify the prudential requirements for solo-regulated UK firms authorized under the Markets in Financial Instruments Directive (MiFID).

    October 25, 2021 WebPage Regulatory News
    News

    ESAs Propose New Rules for Taxonomy-Related Product Disclosures

    The European Supervisory Authorities (ESAs) have delivered to the European Commission (EC) the final report on the draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR).

    October 25, 2021 WebPage Regulatory News
    News

    EBA Advice on Review of Crisis Management/Deposit Insurance Framework

    The European Banking Authority (EBA) published an advice to the European Commission (EC) on funding in resolution and insolvency as part of the review of the crisis management and deposit insurance (CMDI) framework.

    October 25, 2021 WebPage Regulatory News
    News

    FSOC Report Issues Recommendations to Address Climate Risks

    The Financial Stability Oversight Council (FSOC) released a report in response to the U.S. President's Executive Order on climate-related financial risk.

    October 21, 2021 WebPage Regulatory News
    News

    BIS Paper Mulls Policies to Alleviate Challenges Posed by Big Techs

    The Bank for International Settlements (BIS) published a paper that examines the business models and the associated risks posed by big technology firms foraying into financial services sector.

    October 21, 2021 WebPage Regulatory News
    News

    BIS to Launch Asian Green Bond Fund Early Next Year

    The Bank for International Settlements (BIS) announced the development of an Asian Green Bond Fund, in collaboration with the development financing community, to channel global central bank reserves to green projects in Asia Pacific.

    October 21, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7609