Featured Product

    European Council Agrees on Measures to Prevent Accumulation of NPLs

    December 18, 2018

    The European Council presidency and the European Parliament agreed on a new framework for dealing with the non-performing loans (NPLs) of banks. In addition, EU ambassadors have agreed the Council's negotiating position on a proposal reinforcing the role of EBA regarding the risks posed to the financial sector by money laundering activities.

    Agreement on NPLs

    A provisional political agreement was reached on capital requirements applying to banks with NPLs on their balance sheets. The deal will now be submitted for endorsement by EU ambassadors. The proposal, initially put forward by EC in March 2018, aims to create a prudential framework for banks to deal with new NPLs and thus  reduce the risk of their accumulation in the future. It provides for requirements to set aside sufficient own resources when new loans become non-performing and creates appropriate incentives to address NPLs at an early stage. On the basis of a common definition of NPLs, the proposed new rules introduce a "prudential backstop"—that is, common minimum loss coverage for the amount of money banks need to set aside to cover losses caused by future loans that turn non-performing. In case a bank does not meet the applicable minimum level, deductions from banks' own funds would apply. The agreement will be submitted for endorsement by EU ambassadors. Parliament and Council will then be called on to adopt the proposed regulation at first reading.

    Agreement on Proposal Related to AML

    EU Ambassadors agreed on the stance regarding the proposal on anti-money laundering (AML). Strengthening the role and powers of EBA regarding AML supervision for financial institutions would ensure that AML rules are effectively applied in all member states and all authorities involved (in particular prudential and AML supervisors) cooperate closely with each other. According to the agreed text, EBA would be given, in particular, the following tasks:

    • Collecting information from national competent authorities on weaknesses identified in the context of their action to prevent or fight money laundering and terrorist financing
    • Enhancing the quality of supervision through the development of common standards and coordination among national supervisory authorities
    • Performing risk assessments on competent authorities to evaluate their strategies and resources to address the most important emerging AML risks at EU level
    • Facilitating cooperation with non-EU countries on cross-border case
    • As a last resort if national authorities do not act, EBA would be able to address decisions directly to individual banks

    EU and its member states have engaged in a thorough review of existing practices for cooperation between anti-money laundering and prudential supervisors. On December 04, 2018, the Council adopted an action plan setting out short-term non-legislative actions to better tackle AML challenges. The Council recommended that a "post-mortem" analysis of recent money laundering cases in EU banks would be conducted to understand how they came about and to help shape possible additional actions. The European rules on AML have been considerably strengthened in recent years, with two consecutive reforms being adopted since 2015. The latest revision of the AML directive was adopted in April 2018 and is due to be transposed at national level by January 2020. The presidency of the Council will need to negotiate with the European Parliament to reach a final agreement before the new rules can be adopted and applied.

     

    Related Links

    Keywords: Europe, EU, NPLs, AML/CFT, AML/CFT Directive, Prudential Backstops, European Council

    Related Articles
    News

    MAS Amends Notice 610 on Reporting Templates for Banks in Singapore

    MAS published amendments to Notices 610 and 1003 related to submission of statistics and returns, along with the reporting templates and frequently asked questions (FAQs) associated with these Notices.

    January 24, 2020 WebPage Regulatory News
    News

    HKMA Updates Policy Module on Supervisory Review Process

    HKMA is issuing, by notice in the Gazette, revised versions of two Supervisory Policy Manual modules as statutory guidelines under section 7(3) of the Banking Ordinance. The Supervisory Policy Manual modules are CA-G-5 on “Supervisory Review Process” and SB-2 on “Leveraged Foreign Exchange Trading.”

    January 24, 2020 WebPage Regulatory News
    News

    PRA Amends Pillar 2 Capital Framework for Banks

    PRA published the policy statement PS2/20 that contains the final amendments to the Pillar 2 framework and provides feedback to responses to the consultation paper CP5/19 on updates related to Pillar 2 capital framework.

    January 23, 2020 WebPage Regulatory News
    News

    BIS Survey Examines Progress of Central Banks Toward Digital Currency

    BIS published a paper that presents the results of a survey that asked central banks how their plans are developing in the area of central bank digital currency (CBDC).

    January 23, 2020 WebPage Regulatory News
    News

    FED Proposes to Revise Information Collection Under Market Risk Rule

    FED proposed to revise and extend, for three years, FR 4201, which is the information collection under the market risk capital rule.

    January 22, 2020 WebPage Regulatory News
    News

    HKMA Consults on Stay Rules on Financial Contracts Under FIRO

    HKMA published proposals for making rules related to contractual stays on termination rights in financial contracts for authorized institutions under FIRO or the Financial Institutions (Resolution) Ordinance (Cap. 628).

    January 22, 2020 WebPage Regulatory News
    News

    MAS Amends Notices on Minimum Liquid Asset Requirements for Banks

    MAS published amendments to Notices 1015, 613, and 649 related to the minimum liquid assets (MLA) requirements.

    January 21, 2020 WebPage Regulatory News
    News

    APRA Publishes Submission on Fintech and Regtech

    APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology.

    January 21, 2020 WebPage Regulatory News
    News

    OSFI to Implement Operational Risk Capital Rules for Banks in Q1 2022

    OSFI decided to move domestic implementation of the revised Basel III operational risk capital requirements from the first quarter of 2021 to the first quarter of 2022.

    January 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guideline on Threshold for Credit Obligations Past Due

    ECB published a draft guideline, along with the frequently asked questions (FAQs), on the definition of the materiality threshold for credit obligations past due for less significant institutions.

    January 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4541