Featured Product

    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    September 15, 2021

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD). The revised guidelines extend the scope of the deposit guarantee schemes stress testing by requiring more tests in comparison with the past guidelines and by covering all the legal missions entrusted to the deposit guarantee schemes. These guidelines set out the scope of deposit guarantee schemes stress tests; they also set out the established priority tests that deposit guarantee schemes are required to perform and report results on by means of a dedicated reporting template. The deadline for deposit guarantee schemes to submit their next reporting template is set for June 16, 2024 while the revised guidelines will apply from September 15, 2021.

    The EBA revised the existing guidelines to further strengthen the stress testing framework of deposit guarantee schemes, harmonize the approaches across member states, and enhance comparability of test results. The revised guidelines require that all deposit guarantee schemes test their abilities to perform all their functions and to access all their funding sources. The revisions are also intended to strengthen the cooperation between deposit guarantee schemes and other authorities by requiring deposit guarantee schemes to stress test scenarios where such cooperation is necessary. The new provisions encourage the deposit guarantee schemes to stress test scenarios with additional business continuity challenges, such as a pandemic, information and communications technology (ICT) failures, or other similar events. The revisions aim to consolidate depositor confidence about the ability of their national deposit guarantee schemes to promptly repay their funds in case of banking failure and to help EBA carry out a robust peer review of the national deposit guarantee scheme stress tests in 2025. 

    The original guidelines only requested stress testing of deposit guarantee schemes' ability to reimburse depositors. The revised guidelines also require the deposit guarantee schemes to stress test their ability to have access, in due time, to all of their funding sources, including extraordinary ex-post contributions and alternative funding arrangements (irrespective of the amount of available ex-ante funds collected by the deposit guarantee schemes). The incorporated amendments strengthen  cooperation between the deposit guarantee schemes and different authorities by requiring the stress testing of interventions where cooperation with other authorities is necessary. They additionally encourage the deposit guarantee schemes to choose stress-testing scenarios with additional business continuity challenges or external circumstances that create extra stress for the deposit guarantee schemes to perform their functions, such as a pandemic, ICT failures, or other such events. Furthermore, during the March 2021 public consultation on the draft of these revised guidelines, some respondents highlighted the significant extension of the reporting template guidelines in comparison with the one appended to the former guidelines. In response to this, additional dropdown menus and binary (yes-or-no) questions have been inserted to make the completion of the template by the deposit guarantee schemes more efficient. 


    Related Links

    Effective Date: September 15, 2021

    Keywords: Europe, EU, Banking, Deposit Guarantee Schemes, DGSD, Stress Testing, Guidance, ICT Risk, EBA

    Featured Experts
    Related Articles

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News

    UK Authorities Issue Regulatory and Reporting Updates for Banks

    The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.

    June 15, 2022 WebPage Regulatory News

    BaFin Consults on Resolvability Requirements for Resolution Planning

    The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.

    June 10, 2022 WebPage Regulatory News

    EBA Consults on Certain Standards and Guidelines Under CRR and BRRD

    The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.

    June 08, 2022 WebPage Regulatory News

    OJK Publishes Regulatory Updates for Financial Sector Entities

    The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)

    June 03, 2022 WebPage Regulatory News

    EU Publishes Rules on DLT and Data Governance

    The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).

    June 03, 2022 WebPage Regulatory News

    EBA Publishes Phase 2 of Reporting Framework 3.2

    The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications

    June 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8267