The European Banking Authority (EBA) published the 2020 data that serves as input for the internationally agreed standards on which a subset of banks will be identified as global systemically important institutions (G-SIIs), following the final decision from the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB). The published data, which is from the 31 largest institutions in European Union, spans 12 indicators in the categories of size, interconnectedness, substitutability/financial institution infrastructure, complexity, and cross-jurisdictional activity.
Data from 27 institutions shows that the aggregate amount for total exposures, as measured for the leverage ratio, increased by 6.3%, the fastest pace on record, and stood at EUR 20.3 trillion at the end of 2020. Underwriting and payments activities increased by 31.4% and 5.5%, respectively, while aggregate values for trading and available-for-sale-securities increased by 9.9%. Additionally, the value for both cross-jurisdictional claims and liabilities rose to the highest value since 2013 standing at EUR 8.1 trillion (3.7% increase from end-2019) and EUR 6.2 trillion (4.9% increase from end-2019), respectively. However, securities outstanding decreased by 8.1% from end-2019, completely offsetting the 5.8% increase observed last year.
The list of banks included in this is based on the EBA guidelines on disclosure of indicators of global systemic importance. Both the regulatory technical standards on the specification of the methodology for the identification and definition of subcategories of G-SIIs and guidelines on disclosure of G-SIIs have been developed in accordance with the Capital Requirements Directive (CRD IV) on the basis of internationally agreed standards, such as the framework established by BCBS and FSB. In line with the EBA guidelines, all institutions above EUR 200 billion of leverage ratio exposure measure as of end-2020 are required to participate in this disclosure. Identification of a G-SII falls under the responsibility of national competent authorities and the identification process is updated by December 15 every year. The identification will be based on the disclosure of global denominators and G-SIB exercise results, which BCBS and FSB are expected to publish in November each year. Any resulting higher capital buffer requirements then applies about one year after the publication of scoring results by the competent authorities, thus allowing institutions enough time to adjust to the new buffer requirement. The EBA guidelines on disclosure of G-SIIs define uniform requirements for disclosing the values used during the identification and scoring process of G-SIIs, in line with the internationally agreed standards developed by BCBS and FSB.
Keywords: Europe, EU, Banking, G-SII, Disclosures, Systemic Risk, CRD IV, Regulatory Technical Standards, G-SIBs, G-SIB Assessment, FSB, BCBS, EBA
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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