EBA Publishes Reports on Funding Plans and Asset Encumbrance of Banks
EBA published two reports examining the funding plans and asset encumbrance of banks in EU. For this assessment, 159 banks submitted their plans for funding over a forecast period of three years (2018 to 2020). The results of the assessment show that banks plan to match the asset side increase in the forecast years by a growth in client deposits as well as market-based funding.
The report on funding plans reveals that total assets are projected to grow, on average, by 6.2% by 2020. The main drivers for asset growth are loans to households and to non-financial corporates. Banks expect to increase client deposits and long-term debt funding while short-term debt and repo funding are expected to fall. The projected data shows a concentration of debt securities issuance in 2019 and 2020. Data also show that the spread between interest rates for client deposits and for loans to clients declined in 2017 and most banks expect the spread to decline even further in 2018. On the cost of funding, banks seem optimistic as they assume their costs of long-term market-based funding in 2018 will remain at 2017 levels. The report suggests that the evolution of banks' interest spread and market-based funding costs should be closely monitored, particularly for banks that are under pressure to increase profitability or without access to market-based funding at reasonable rates.
The report on asset encumbrance shows that in December 2017 the overall weighted average asset encumbrance ratio stood at 27.9%, compared to 26.6% in 2016. The modest increase of the encumbrance ratio is not an issue of immediate concern in the funding structure of EU banks. Additionally, repos, covered bonds, and over-the-counter derivatives are among the main source of asset encumbrance. Banks in countries that were more affected by the sovereign debt crisis still have high levels but have shown a decrease in the volume of encumbrance, which could reflect a general improvement in the funding situation in these countries. These reports aim to provide important information for EU supervisors to assess the sustainability of banks' main sources of funding of banks.
Related Links
Keywords: Europe, EU, Banking, Asset Encumbrance, Funding Plans, EBA
Previous Article
ESMA Chair Speaks on Technological Transformation of Capital MarketsRelated Insights
|
News
HKMA Announces Intention to Consult on Updated BCBS Disclosure RulesHKMA announced that it will consult the industry in due course on the relevant implementation proposal to give effect to the disclosure requirements of the December 2018 package by BCBS.
December 17, 2018
WebPage
Regulatory News
|
|
News
US Agencies Propose Derivative Counterparty Credit Exposure FrameworkUS Agencies (OCC, FED, and FDIC) proposed to implement a new approach for calculating the exposure amount of derivative contracts under the regulatory capital rule.
December 17, 2018
WebPage
Regulatory News
|
|
News
HKMA Issues and Revises Reporting Forms Under the IRRBB FrameworkHKMA issued a revised version of the Supervisory Policy Manual (SPM) IR-1, with an updated title “Interest Rate Risk in the Banking Book” (IRRBB).
December 14, 2018
WebPage
Regulatory News
|
|
News
EBA Single Rulebook Q&A: Second Update for December 2018EBA published answers to six questions under the Single Rulebook question and answer (Q&A) updates for this week.
December 14, 2018
WebPage
Regulatory News
|
|
News
OSFI Proposes Changes to Guideline on Large Exposure LimitsOSFI proposed revisions to the Guideline B-2 on Large Exposure Limits, for implementation in the first quarter of 2020.
December 13, 2018
WebPage
Regulatory News
|
|
News
BCBS Consults on Disclosure Rules for Leverage Ratio Window-DressingBCBS published a consultative document on revisions to the leverage ratio disclosure requirements to address the leverage ratio window-dressing behavior.
December 13, 2018
WebPage
Regulatory News
|
|
News
PRA Updates the Policy on Approach to Systemic Risk BufferPRA published the final Statement of Policy on the PRA approach to the implementation of the systemic risk buffer (SRB), as proposed in the consultation paper CP29/18.
December 13, 2018
WebPage
Regulatory News
|
|
News
EP Report Examines Financial Supervision and Regulation in USEuropean Parliament published a report that provides a concise overview of the Dodd-Frank Act, the challenges of its implementation, and efforts to roll back the Act, in large part due to what are viewed to be vague and impractical provisions.
December 12, 2018
WebPage
Regulatory News
|
|
News
FED Proposes to Revise Several Reporting Forms Including FR Y-9CFED proposed to extend for three years, with revision, the FR Y-9, FR Y-7N, FR Y-11, and FR 2314 family of reports, in addition to the forms FR 2886b, FR Y-8, FR 2248, FR 2320, FR 2644, and FR 2886b.
December 12, 2018
WebPage
Regulatory News
|
|
News
EBA Finalizes Guidelines on the STS Criteria in SecuritizationEBA published the final guidelines that provide a harmonized interpretation of the criteria for a securitization to be eligible as simple, transparent, and standardized (STS) on a cross-sectoral basis throughout EU.
December 12, 2018
WebPage
Regulatory News
|
