The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022. In the coming months, EIOPA plans to focus on preparing regulatory and implementing technical standards from the Digital Operational Resilience Act (DORA), implementing the cyber underwriting strategy, integrating sustainable finance considerations across all areas of work, and conducting a follow-up to the Solvency II review. The key EBA priorities include updating the prudential framework for supervision and resolution, strengthening the EU-wide stress-testing framework, leveraging the centralized infrastructure for supervisory data (EUCLID), and focusing on digital resilience, fintech, and innovation.
The following are the key EBA deliverables and work activities planned for 2022:
- Regulatory technical standards on standardized and simplified methodologies for the interest rate risk in the banking book (IRRBB), regulatory standards on supervisory shock scenarios and outlier tests for the IRRBB, and the guideline on the IRRBB and the credit spread risk in the banking book (CSRBB) is expected to be published in the first quarter of 2022.
- Under the securitization rules, regulatory technical standards on performance-related triggers, regulatory technical standards on synthetic excess spread (STS synthetic) are expected in the first quarter of 2022.
- The regulatory technical standards on homogeneity (STS synthetic), guideline on calculation of K IRB for dilution and credit risk, guideline on the harmonized interpretation and application of the requirements set out in Articles 26b to 26e (STS synthetic), and the monitoring report on capital treatment of nonperforming exposures are expected to be published in the second quarter while the implementing technical standards on the mapping of external credit assessment institution (ECAI) credit assessment for securitization positions will be published in the third quarter of the year.
- In the fourth quarter, EBA expects to publish the updated implementing technical standards in preparation for the 2022 benchmarking portfolios (credit risk), the 2021 benchmarking report on internal ratings-based models (credit risk), regulatory technical standards on the definition of group of connected clients (large exposures), and, under securitization, the reports on hierarchy-of-approaches practices for calculation of risk-weights (CRR Article 254(8))6) and on equivalence regime for covered bonds.
- Work is ongoing on the market risk deliverables such as the regulatory technical standards on material extensions and changes under the IMA, on the assessment methodology for the IMA, on extraordinary circumstances for permission to continue
using the IMA, and on extraordinary circumstances for permission to limit the backtesting add-on. Additionally, the updated implementing technical standards in preparation for the 2022 benchmarking portfolios (market risk) are expected to be out in the third quarter, with the 2021 benchmarking report on market risk models expected in the fourth quarter.
- With respect to the investment firm rules, regulatory technical standards on liquidity risk measurement, and guideline to specify the criteria when exempting Article 12(1) investment firms (class 3) from the liquidity requirements are expected in the second quarter while the guideline on benchmarking of internal models is expected to be published in the fourth quarter.
- Guideline on common SREP under the Investment Firms Directive (IFD) and the regulatory technical standards on Pillar 2 add-ons under IFD are expected to be released in the second quarter.
- In the area of governance, EBA is expected to release guideline on high earners under the Capital Requirements Directive (CRD) and the guideline on high earners under IFD in the second quarter while the guideline on benchmarking remuneration and gender pay gap under CRD and IFD is expected in the third quarter.
- With respect to reporting, the implementing technical standards on reporting of the IRRBB and the extension of the implementing standards on Pillar 3 disclosures on environmental, social, and governance (ESG) risks (full scope of ESG risks) are planned for the fourth quarter.
- In the area of sustainable finance, EBA will release a discussion paper on a potential prudential treatment of assets linked with sustainability objectives in the first quarter while the guideline on ESG risk management and information on the monitoring system for ESG risks in the banking sector are expected to be out in the fourth quarter.
- EBA will implement ESG considerations into its policy development via ESG impact assessments and will progress in incorporating ESG risks into its risk analysis and stress testing. EBA will prepare a report for consultation on a potential prudential treatment of assets associated with environmental and/or social objectives. EBA will also continue to participate in global, European, and national initiatives in this regard, such as the Platform on Sustainable Finance and the Network for Greening the Financial System.
- Continued work on value chains, platformization, crypto assets, and the impact of artificial intelligence can be expected too.
Keywords: Europe, EU, Banking, Insurance, EUCLID, Fintech, AML/CFT, Stress Testing, ESG, IFRS 9, Sustainable Finance, Solvency II, Pillar 3, Basel, Regulatory Capital, Reporting, Credit Risk, Market Risk, Operational Resilience, IRRBB, IFD, Investment Firms, CRD, EBA, EIOPA
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