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    DNB Publishes Multiple Regulatory Updates for Banks

    September 07, 2021

    DNB, the central bank of Netherlands, published an updated list of additional data requests for banks. The updated data request, which has been highlighted with the word "UPDATE" in red, is related to Basel III monitoring quantitative impact study. DNB also announced that the reporting templates and filing indicators for quarterly reporting of minimum own funds and eligible liabilities/total loss absorbing capacity (MREL-TLAC) are now available in the Digital Reporting Portal (DLR). The reporting deadline for reference period June 30, 2021 (second quarter of 2021) is September 30, 2021. Banks within the scope of this report have been informed by DNB.

    Additionally, DNB and 24 other national central banks and financial supervisory authorities in the European Union issued a letter to the European Commission (EC) for full, consistent, and timely implementation of the Basel III accord. The letter notes that EC is  preparing a legislative proposal to implement the final parts of the globally agreed Basel III framework for banks. It further highlights that it is in the long-term interests of the European Union to implement the globally agreed standards, including all aspects of the Basel III agreement. This has three important implications:

    • The output floor should be implemented as agreed in Basel, with all risk-based capital measures and buffers calculated on the basis of one single set of risk-weighted assets. This has several benefits. It is simple and transparent, reduces the variability of risk-weighted assets, and builds confidence in banks’ capital structures. It also improves the level playing field between banks using internal models and banks using standardized models, as well as between different banks using internal models worldwide. A parallel stack approach to the output floor does not attain these benefits and therefore should not be pursued. 
    • The new standardized approach for credit risk should be implemented as agreed globally. This new approach is more risk-sensitive than the old one and it entails a delicate balance between the risks in different exposure types.
    • European Union should refrain from making further exemptions from Basel III or from making the banking regulatory framework more complex. Deviations specific to the European Union should be minimized and the existing deviations from Basel should be re-assessed. 

     

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    Keywords: Europe, Netherlands, Banking, Reporting, Basel, Regulatory Capital, DLR, MREL, TLAC, Credit Risk, Standardized Approach, Output Floor, EBA, DNB, EC

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