EBA revised the final draft regulatory technical standards on specification of the methodology for identification of global systemically important institutions (G-SIIs). EBA also revised the guidelines on specification and disclosure of systemic importance indicators. These revisions were the result of the revised BCBS framework on identification of global systemically important banks (G-SIBs) as well as the new requirements laid down in the fifth Capital Requirements Directive (CRD5). These revised technical standards will apply from the 2022 G-SII assessment exercise, based on information at the end of 2021. The regulation on the technical standards shall enter into force on the day following that of its publication in the Official Journal of the European Union.
One of the key changes stemming from the revised approach of BCBS is the introduction of a new trading volume indicator, which adds up to the existing 12 indicators used to measure systemic importance. In addition, the revised standards include insurance activities in the indicators-based measurement approach. At the EU level, CRD5 has mandated EBA to develop an additional methodology for identification of G-SIIs that excludes the cross-border activities of EU banks in member states of the European Banking Union. The rationale behind this request is to recognize the efforts made in recent years to create harmonized European banking regulation and a common approach to resolution. This additional EU methodology shall take into account the Single Resolution Mechanism (SRM), which could lead to the re-allocation of a G-SII from a higher to a lower sub-category, potentially translating into lower capital buffer requirements. The list of EU G‐SIBs identified by BCBS and the G‐SIIs identified by authorities of member states have been identical since 2014 and are expected to remain so in future.
Data instructions on indicator values and detailed template specifications are included in the EBA guidelines. Annual updates to these instructions and specifications will be published on EBA website. These updates should be taken into account by all groups and institutions with an exposure measure exceeding EUR 200 billion, with insurance subsidiaries’ activities included in the calculation. The EBA guidelines on G-SIIs disclosure requirements have also been updated as a result of the revised Basel framework. These requirements apply not only to institutions that have already been identified as G-SIIs but also to other very large entities in EU that have an overall leverage ratio exposure measure exceeding EUR 200 billion. The EBA guidelines go beyond the requirements laid down in the regulation and enable member state authorities to perform the identification and scoring process and disclosure in a timely manner and, in particular, before the identification of any G-SIIs.
In addition to setting out the disclosure requirements in the EBA guidelines, EBA will seek to establish, through the implementing technical standards on supervisory reporting, reporting obligations for the same systemic importance indicators, in a proportionate manner and for large institutions only. The availability and accuracy of such data, which is expected to be thoroughly checked by the relevant authorities and the reporting institutions in scope, will be importance for the soundness of the EU framework for identifying and assigning buffer rates to G‐SIIs and, therefore, for its credibility at the global level. The draft technical standards will be submitted to EC for endorsement, following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union, if necessary. The guidelines will be translated into the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations.
Effective Date: OJ+1 Day
Keywords: Europe, EU, Banking, Basel, CRD5, G-SII, G-SIB, Disclosures, Reporting, Cross-Border Activities, Systemic Risk, BCBS, EBA
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