Featured Product

    EBA Suggests Further Changes to Standards on IRB Assessment

    December 14, 2020

    EBA issued an opinion on the amendments proposed by EC to the final draft regulatory technical standards of EBA on the assessment methodology for internal ratings-based (IRB) approach. These standards specify the assessment methodology that competent authorities are expected to follow when assessing the compliance of credit institutions and investment firms with the requirements to use the IRB approach laid down in the Capital Requirements Regulation (CRR). EBA supports the EC progress in the adoption of these standards and provides, in the Annex to the opinion, a revised version of standards, incorporating changes where, it believes, the EC amendments do not reflect the agreed policy.

    EBA has identified a number of substantive changes in the EC's version of the technical standards compared to the final draft submitted in July 2016. The most important change is related to the flexibility for competent authorities to apply any other tests and verifications when assessing the institutions’ compliance with the IRB approach. EBA is concerned about the amendments of EC in this regard, as this could potentially hamper supervisory efforts to ensure harmonized use of IRB models. Other substantive changes identified by EBA relate to the assessment of the institutions’ validation of internal models, approaches toward grade assignment and risk parameter estimation, and any governance and procedural aspects required in the context of the IRB approach. In these areas also, EBA notes that the amendments change the policy that was developed and agreed by EBA. The opinion highlights a number of editorial and structural changes that are needed to ensure consistency if taking on board the changes proposed by EC. The other changes are considered of non-substantive nature. However, there are some points that EBA considers should be reviewed or improved. These are included in the opinion under section "Unintended consequences of the drafting changes." 

    In the past, EBA work on the comparability of risk-weighted exposures has demonstrated that significant differences in supervisory practices can contribute to non-risk-based differences in capital requirements for institutions using the IRB approach. Consequently, EBA fully supports the EC progress to adopt these technical standards. 

     

    Related Links

    Keywords: Europe, EU, Banking, IRB Approach, Regulatory Capital, Basel, Supervisory Assessment, EC, EBA

    Featured Experts
    Related Articles
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News
    News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697