Featured Product

    ESRB Recommends EU-Wide Reciprocation of 5% LE Limit in France

    February 11, 2019

    ESRB adopted a recommendation (ESRB/2018/8) that seeks to ensure that the 5% large exposure (LE) limit of France applies not only to exposures of systemically important institutions (SIIs) authorized in France, but also to exposures of SIIs authorized in other EU member states. It thereby enhances the effectiveness and consistency of macro-prudential policy in the EU and contributes to a level playing field in the Single Market. The Recommendation ESRB/2018/8 was published in the Official Journal of the European Union on February 01, 2019. The measure applies from July 01, 2018 to SIIs authorized in France at the highest level of consolidation of their banking prudential perimeter.

    This large exposure limit is for exposures of SIIs to highly indebted large non-financial corporations having their registered office in France. After considering the cross-border implications of this measure, the General Board of ESRB decided on December 05, 2018 to include the French measure in the list of macro-prudential policy measures to be reciprocated under Recommendation ESRB/2015/2. Relevant authorities are recommended to adopt reciprocating measures no later than six months following the publication of Recommendation ESRB/2018/8 in the Official Journal of the European Union. If the same macro-prudential policy measure is not available in their jurisdiction, relevant authorities are recommended to apply a macro-prudential policy measure available in their jurisdiction that has the most equivalent effect and to adopt the equivalent measure after consulting ESRB.

    Upon the reciprocation of this measure, SIIs will have to apply a 5% large exposure limit to their exposures to any highly indebted non-financial corporation or group of connected non-financial corporations residing in France to which their original exposure is equal to or exceeds EUR 300 million. An NFC is considered highly indebted if it has, at its highest level of consolidation, a leverage ratio greater than 100% and a financial charges coverage ratio below 3. Non-financial corporations that do not have their registered office in France and that are not a subsidiary or an economically dependent entity of, or directly or indirectly controlled by, a non-financial corporation having its registered office in France fall outside the scope of the measure.

     

    Related Links

    Effective Date (recommended): August 01, 2019

    Keywords: Europe, EU, France, Banking, Large Exposures, Recommendation ESRB/2018/8, SII, Systemic Risk, Macro-prudential Policy, ESRB

    Featured Experts
    Related Articles
    News

    PRA Consults on Approach to Supervising Liquidity and Funding Risks

    In consultation paper (CP27/19), PRA published a proposal (CP27/19) to update the supervisory statement SS24/15 on the PRA approach to supervising liquidity and funding risk.

    October 17, 2019 WebPage Regulatory News
    News

    US Agencies Consult on Policy Statement on Allowance for Credit Losses

    US Agencies (FDIC, FED, NCUA, and OCC) are consulting on the policy statement on allowances for credit losses and on the guidance on credit risk review systems.

    October 17, 2019 WebPage Regulatory News
    News

    FSI Paper Examines Use of Suptech Initiatives by Financial Authorities

    The Financial Stability Institute (FSI) of BIS published a paper that examines the suptech developments by analyzing suptech initiatives of 39 financial authorities globally.

    October 17, 2019 WebPage Regulatory News
    News

    FSB Report Examines Implementation and Impact of G20 Financial Reforms

    FSB published fifth annual report on the implementation and effects of the G20 financial regulatory reforms.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Launches Consultation on Comprehensive Pillar 3 Disclosures

    EBA proposed the new comprehensive implementing technical standard (ITS) for public disclosures by financial institutions.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Consults on Revised Technical Standards on Supervisory Reporting

    EBA launched a consultation on the revised implementing technical standards, or ITS, on supervisory reporting.

    October 16, 2019 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel Framework

    BCBS published the seventeenth progress report on adoption of Basel regulatory framework.

    October 16, 2019 WebPage Regulatory News
    News

    BoE and FCA Examine Use of Machine Learning in Financial Sector in UK

    BoE and FCA published a report on the results of a joint survey by BoE and FCA in 2019 to better understand the use of machine learning in the financial services sector in UK.

    October 16, 2019 WebPage Regulatory News
    News

    FSB Report Examines Implementation of OTC Derivative Reforms

    FSB published annual progress report on implementation of the agreed G20 reforms for over-the-counter (OTC) derivatives markets.

    October 15, 2019 WebPage Regulatory News
    News

    APRA Proposes Measures to Strengthen Capital for Bank Depositors

    APRA proposed changes to APS 111, which is the prudential standard on measuring capital adequacy and establishes the criteria for regulatory capital requirements of authorized deposit-taking institutions.

    October 15, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3981