Featured Product

    EBA to Assess Application of Infrastructure Supporting Factor in CRR2

    April 05, 2022

    The European Banking Authority (EBA) published its risk dashboard for the fourth quarter of 2021, which indicates that first-round risks stemming from the Russian invasion of Ukraine are not a fundamental threat to the stability of the banking system, but second-round effects may be more material. The assessment highlights that the second-round effects will impact profitability, asset quality, operational risk, market risk, liquidity, and funding risk. EBA also launched survey for banks on the application of the infrastructure supporting factor in accordance with the Capital Requirements Regulation (CRR 2) and published revisions to the regulatory technical standards on strong customer authentication and secure communication under the revised Payment Services Directive (PSD2).

    The EBA survey with respect to CRR2 is intended to assess the experiences of banks with the application of the infrastructure supporting factor in accordance with the Capital Requirement Regulation (CRR 2). In addition, the survey aims at providing valuable information on the materiality of infrastructure project loans across EU banks, irrespective of whether credit institutions specialize in infrastructure lending or not. The survey runs until 27 May 2022. Article 501a of the CRR 2 introduces a reduction by 25% of the own fund requirements for specific corporate exposures, the so-called infrastructure supporting factor. The eligible infrastructure project loan exposures must be to entities that were created specifically to finance or operate physical structures or facilities, systems, and networks that provide or support essential public services. They must also meet additional conditions, which imply a certain minimum level of quality or maximum riskiness of the exposures. The original intention of CRR2 was to have the supporting factor in place from June 28, 2021. However, in response to the COVID-19 pandemic, the application was frontloaded to June 27, 2020 in the so-called “quick-fix” CRR package. The national competent authorities will disseminate the survey directly to the largest banks. However, any bank willing to participate in the survey can download the Excel file, which also includes instructions, and submit the template filled on a best effort basis to the respective national competent authority by May 27, 2022. The information requested should be submitted at the highest level of consolidation in the European Economic Area and should be provided as of the reference data December 31, 2021. 

    With regard to the regulatory technical standards under PSD2, in light of the comments received during the consultation process, EBA agreed with some of the proposals and their underlying arguments and introduced some changes to the draft amending regulatory technical standards while retaining the mandatory exemption proposed in the consultation paper. EBA disagreed with the respondents that were of the view that the proposed amendments are not technology neutral and will lead to an uneven playing field between ASPSPs that offer a dedicated interface (such as an API) and those that offer access to third-party providers via their customer interfaces. Finally, EBA also introduced additional clarifications on the application of the mandatory exemption. EBA states that the mandatory exemption does not prejudice the choice that ASPSPs have between offering a dedicated interface and allowing third-party providers to use the ASPSPs' direct customer interfaces, or the ability of ASPSPs that have chosen the latter option to decide whether or not to apply the voluntary exemption in Article 10 in their direct relationship with their customers. EBA extended the timeline for account servicing payment service providers (ASPSPs) to make available to account information service providers (AISPs) the changes to their interfaces from 1 month to 2 months before the implementation of these changes and extended the overall implementation period accordingly from 6 months to 7 months after the publication of the amending regulatory technical standards in the Official Journal of the European Union. The draft amending regulatory standards will be submitted to the European Commission for endorsement, following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union. The amending regulatory technical standards will apply seven months after entry into force.

     

    Related Links

     

    Keywords: Europe, EU, Banking, Risk Dashboard, Regulatory Technical Standards, CRR2, Basel, Regulatory Capital, Standardized Approach, IRB Approach, Infrastructure Supporting Factor, Specialized Lending Transactions, Lending, Credit Risk, PSD 2, API, Open Banking, Regtech, Third-Party Ecosystem, Fintech, EBA, Subheadline

    Featured Experts
    Related Articles
    News

    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
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    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
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    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
    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
    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
    News

    BCBS Issues Climate Risk Principles while HKMA Expresses Its Support

    The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.

    June 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8280