Featured Product

    EBA Proposes Revised Standards for Own Funds and Eligible Liabilities

    May 29, 2020

    EBA published a consultation paper on the draft amended regulatory technical standards on own funds and eligible liabilities. The draft regulatory technical standards align the existing provisions to changes introduced in the revised Capital Requirements Regulation (CRR) in the area of own funds. The consultation on amended regulatory standards ends on August 31, 2020. The final draft regulatory standards will be subsequently submitted to EC for endorsement before being published in the Official Journal of the European Union.

    Last year, European legislators adopted a series of measures, including the “Risk Reduction Measures Package” that complements the existing banking framework to lower risks of failure, reduce the severity of failure, and minimize costs to the tax payer. Part of these risk reduction measures consists in applying targeted adjustments to the own funds framework set out in CRR to reflect EU specificities and a few broader policy considerations. In parallel, the CRR and the Bank Recovery and Resolution Directive (BRRD) have been amended to implement, in EU, the total loss absorbing capacity (TLAC) standard agreed upon for global systemically important institutions (G-SIIs) at the G-20 table. Own funds and eligible liabilities’ requirements have been set out alongside capital requirements to reinforce loss absorption capacity for banks, both going-concern and in resolution. EBA has historically been mandated to further specify some of the conditions of the own funds regime. With the introduction of eligible liabilities instruments in CRR, EBA is mandated to specify the eligible liabilities regime, in some cases with an explicit obligation for both regimes to be fully aligned. To ensure consistency across the spectrum of instruments with similar loss absorption features, it is necessary to approach both sets of mandates together.

    For this reason, EBA has chosen to deal with the own funds regime and the eligible liabilities regime in a single set of regulatory technical standards. This consultation paper puts forward draft amendments to the Commission Delegated Regulation No 241/2014 with regard to the regulatory technical standards own funds requirements for institutions, which are now also applicable to eligible liabilities instruments. The consultation paper elicits stakeholder views on the design of the new provisions. With the revised Capital Requirements Regulation (CRR) introducing new criteria and requirements for eligible liabilities, these amended regulatory technical standards capture several aspects of eligible liabilities as well as the changes to the own funds framework. The changes also relate to the provisions for the regime of supervisory prior permission for the reduction of own funds and market making. The draft amended regulatory technical standards specify some of the newly introduced criteria for eligible liabilities instruments derived from the own funds regime, including the:

    • Absence of direct or indirect funding for the acquisition of ownership of eligible liabilities
    • Absence of incentives to redeem
    • Need for the resolution authority’s prior permission for the reduction of eligible liabilities

     

    Related Links

    Comment Due Date: August 31, 2020

    Keywords: Europe, EU, Banking, CRR, BRRD, Own Funds, Eligible Liabilities, Regulatory Technical Standards, TLAC, Resolution Framework, EBA

    Featured Experts
    Related Articles
    News

    FED Revises Capital Planning and Stress Testing Requirements for Banks

    FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.

    January 19, 2021 WebPage Regulatory News
    News

    ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020

    ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.

    January 19, 2021 WebPage Regulatory News
    News

    ESAs Publish Reporting Templates for Financial Conglomerates

    ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.

    January 18, 2021 WebPage Regulatory News
    News

    EBA Publishes Report on Asset Encumbrance of Banks in EU

    EBA published the annual report on asset encumbrance of banks in EU.

    January 18, 2021 WebPage Regulatory News
    News

    MAS Revises Guidelines on Technology Risk Management

    MAS revised the guidelines that address technology and cyber risks of financial institutions, in an environment of growing use of cloud technologies, application programming interfaces, and rapid software development.

    January 18, 2021 WebPage Regulatory News
    News

    US Agencies Publish Updates for Call Reports, FFIEC 101, and FR Y-9C

    FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.

    January 15, 2021 WebPage Regulatory News
    News

    EBA Proposes Guidelines for Establishing Intermediate Parent Entities

    EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.

    January 15, 2021 WebPage Regulatory News
    News

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6462