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. Also published was a corrigendum to the Sustainable Finance Disclosure Regulation (SFDR), along with the two draft notices on interpretation and implementation of certain legal provisions of the Taxonomy Regulation.
The key highlights of the aforementioned and other updates are as follows:
- The Implementing Regulation 2022/2454 sets out the implementing technical standards for the application of the Financial Conglomerates Directive (FICOD or 2002/87/EC) with regard to supervisory reporting of risk concentrations and intra-group transactions. The Annexes to the regulation contain templates and instructions for reporting on intra-group transactions and risk concentration. The regulation will come into effect from January 08, 2023. It shall apply from December 31, 2023.
- Regulation on internal approach benchmarking amends the implementing technical standards laid down in the Implementing Regulation 2016/2070 regarding benchmark portfolios, reporting templates, and reporting instructions to be applied for reporting of the results of the calculations of risk-weighted exposure amounts or own funds requirements of internal models by institutions, for their exposures or positions that are included in those benchmark portfolios. The Implementing Regulation 2016/2070 specifies the reporting requirements for institutions to enable the European Banking Authority (EBA) and competent authorities to monitor the range of risk-weighted exposure amounts or own funds requirements for exposures or transactions in the benchmark portfolio resulting from the internal approaches of those institutions and to assess those approaches as required by CRD IV. Annexes I, II, IV, V, and VI of the Regulation 2016/2070 are being replaced by the text in Annexes I, II, III, IV, and V of this regulation, respectively. The regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
- The Delegated Regulations 2022/2579 and 2022/2580 supplement the Capital Requirements Directive (CRD or 2013/36/EU) with regard to the regulatory technical standards specifying the information to be provided in the application for the authorization as a credit institution and specifying the obstacles that may prevent the effective exercise of supervisory functions of competent authorities. In addition, the Implementing Regulation 2022/2581 sets out the implementing technical standards for the application of CRD with regard to provision of information in applications for authorization of a credit institution. The date of effect for these regulations will be January 18, 2023.
- The recently published corrigendum to SFDR (Regulation 2022/1288) supplements Regulation 2019/2088 with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of "do no significant harm," specifying the content, methodologies, and presentation of information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in pre-contractual documents, on websites and in periodic reports. This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. This Regulation shall apply from January 01, 2023.
- The two draft commission notices on Taxonomy Regulation set out additional guidance to companies on what and how to report about environmental performance under the EU Taxonomy. The documents address frequently asked questions (FAQs) on the interpretation and implementation of the EU Taxonomy. The draft notices will help the companies in preparing their first mandatory reporting exercise, which will be used by financial market participants in disclosures concerning the sustainability aspects of financial products. About 4,000 large companies will be reporting as of January 01, 2023 according to the EU Taxonomy framework, which establishes a common language for "sustainable economic activities" for financial market participants and investors. Among other aspects, the draft notices provide clarifications about the technical screening criteria for taxonomy-aligned economic activities set out in the Climate Delegated Act and the reporting of taxonomy-eligible and taxonomy-aligned economic activities and assets in accordance with the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation. The draft notices will be applicable and effective against third parties following the official adoption, once all languages are available.
- Implementing Regulation 2022/2454
- Regulation on Internal Model Benchmarking
- Regulation 2022/2579
- Regulation 2022/2580
- Regulation 2022/2581
- Corrigendum to SFDR
- Press Release on Taxonomy FAQs
- Notice on Climate Delegated Act (PDF)
- Notice on Disclosures Delegated Act (PDF)
Keywords: Europe, EU, Banking, Reporting, Basel, CRD, Risk Concentration, Implementing Technical Standards, Internal Approaches, Market Risk, Credit Risk, Taxonomy Regulation, Climate Delegated Act, Sustainable Finance, FICOD, Intra Group Transaction, SFDR, Authorization Regime, ESG, EC
Previous ArticleCBIRC Revises Measures on Corporate Governance Supervision
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.
The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.
The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).
The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The Network for Greening the Financial System (NGFS) published its latest set of long-term climate macro-financial scenarios (Phase IV) for assessing forward-looking climate risks.