General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
September 21, 2017

The Joint Committee of the ESAs published its Autumn 2017 report on risks and vulnerabilities in the financial system in EU. The report highlights the challenges arising from fintech developments, along with the potential financial stability risks arising from the withdrawal of the UK from the EU.

Uncertainties around the terms of withdrawal of the UK from the EU have the potential to expose the EU27 and the UK to economic instability and to weaken market confidence. Such a situation could cause disruptions to the legal framework for financial services and the continuity of financial contracts between parties in the EU27 and the UK. As passport arrangements enabling the EU and UK-domiciled financial entities to operate in each other’s jurisdictions will expire, business continuity planning is essential. Additionally, the report highlights that rapid developments in the area of fintech are raising new opportunities and challenges for financial institutions and final users. Data privacy issues, potential client discrimination, vulnerability to cyber-crime, and associated legal issues are among the key risks to consumers and financial institutions. The report also presents regulatory and supervisory initiatives to monitor and mitigate the identified risks.

 

Persistent low profitability of banks and insurers also remains a major challenge. Still high levels of nonperforming loans, or NPLs, and the need to adapt business models, including the need for substantial investment in technological infrastructures, aggravate profitability challenges. The combination of low yields, low economic growth and low asset quality in some countries continues to affect EU insurers, as both life and nonlife insurers are largely exposed to interest-rate-sensitive assets, and business models may encompass interest-rate-sensitive product lines. The Joint Committee had earlier published a report identifying risks and vulnerabilities in the EU financial sector in April 2017.

 

Related Links

Report on Risks and Vulnerabilities in EU, September 2017 (PDF)

Joint Committee Report, April 2017 (PDF)

Keywords: Europe, EU, Banking, Insurance, Brexit, Passporting Regime, NPLs, Fintech, ESAs

Related Insights
News

US Agencies Extend Consultation Period for the Proposed SA-CCR

US Agencies (FDIC, FED, and OCC) extended the comment period for a proposed rule to update their standards for how firms measure counterparty credit risk posed by derivative contracts.

February 18, 2019 WebPage Regulatory News
News

FED Extends Consultation Period for Stress Testing Rule

FED has published in the Federal Register a notice proposing amendments to the company run and supervisory stress test rules.

February 15, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Third Update for February 2019

EBA published answers to two questions under the Single Rulebook question and answer (Q&A) updates for this week.

February 15, 2019 WebPage Regulatory News
News

FSB Report Examines Financial Stability Implications of Fintech

FSB published a report that assesses fintech-related market developments and their potential implications for financial stability.

February 14, 2019 WebPage Regulatory News
News

US Agencies Amend Regulatory Capital Rule to Allow Phase-In for CECL

US Agencies (FDIC, FED, and OCC) adopted the final rule to address changes to credit loss accounting under the U.S. generally accepted accounting principles; this includes banking organizations’ implementation of the current expected credit losses (CECL) methodology.

February 14, 2019 WebPage Regulatory News
News

FASB Proposes Taxonomy Improvements for the Credit Losses Standard

FASB proposed the taxonomy improvements for the proposed Accounting Standards Updates on Targeted Transition Relief for Topic 326 (Financial Instruments—Credit Losses) and Topic 805 (on Business Combinations—Revenue from Contracts with Customers).

February 14, 2019 WebPage Regulatory News
News

SRB Publishes Framework for Performing Valuations in Resolution

SRB published its framework for performing valuations in resolution. The framework provides independent valuers and the general public with an indication of the expectations of SRB on the principles and methodologies for valuation reports, as set out in the legal framework.

February 14, 2019 WebPage Regulatory News
News

FED Issues Correction in Historical Dataset in its 2019 Stress Tests

FED identified an error in the historical dataset used in its 2019 stress tests and issued a correction.

February 13, 2019 WebPage Regulatory News
News

OCC Consults on Company-Run Stress Test Requirements for Banks

OCC proposed amendments to its company-run stress testing requirements for national banks and Federal savings associations, consistent with section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

February 12, 2019 WebPage Regulatory News
News

CFTC Extends Comment Periods for Trade Execution Requirement Proposals

CFTC announced that it is extending comment period for the proposed amendments related to the regulations on swap execution facilities (SEF) and trade execution requirement.

February 12, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2610