The European Banking Authority (EBA) published the updated taxonomy package under the reporting framework 3.2 as well as answers to 12 questions under the Single Rulebook question and answer (Q&A) tool. Also published were the quarterly risk dashboard, including results of the Autumn edition of the Risk Assessment Questionnaire (RAQ); a report on the assessment of the liquidity coverage ratio (LCR) of banks; and a review of the authorization of payment institutions and e-money institutions under the revised Payment Services Directive (PSD2).
Below are the key highlights of these developments:
- In the recent taxonomy package under the reporting framework 3.2, updates are limited to the JSON files and thus only impact the XBRL-CSV reporting documents. To identify columns, a data point identifier is used instead of a data point version identifier.
- The Single Rulebook answers for December 2022 addressed issues related to the Banking Recovery and Resolution Directive (BRRD) as well as credit risk, liquidity risk, and software deductions from own funds under the Capital Requirements Directive and Regulation (CRD and CRR), among others.
- The report on liquidity measures assesses the compliance of banks with the liquidity risk rules under the European Union CRR, based on Common Reporting or COREP. The report also discusses the impact of the Targeted Longer-Term Refinancing Operations (TLTRO-3) from ECB, assesses the impact of LCR on the lending activities of banks, and examines the interaction between the LCR and the net stable funding ratio (NSFR) metrics. Overall, the report shows that bank LCRs declined in the first half of the year due to an increase in outflows following the outbreak of the war in Ukraine and the general macroeconomic uncertainty. However, despite some reduction in the LCR levels, the LCR buffers remain significantly above the minimum requirement.
- The risk dashboard reveals that capital and liquidity ratios remain robust for the majority of banks while funding costs are an increasing concern and the asset quality expectations have deteriorated according to the Risk Assessment Questionnaire. Banks engaged in green lending have been using the European Union Taxonomy, which is the leading standard for banks that originate or are planning to originate green loans. The assessment also reveals that the share of banks stating to have issued green bonds remains significantly higher (75%) compared to other sustainability funding instruments.
- The review of authorizations under PSD2 resulted in recommendations with respect to the implementation of EBA guidelines, the competent authorities' substantive review of applications, and to the European Commision for ensuring more consistency and harmonization across the EU and create a level playing field. One recommendation is that, as part of its ongoing PSD2 review process, the European Commission should mandate EBA to develop a common assessment methodology for granting authorization as a payment institution or as an e-money institution; this methodology could include a detailed section on the business plan analysis, governance, and internal mechanisms and the assessment of directors and persons responsible for the management of these entities.
- Taxonomy Package
- Single Rulebook Q&A Updates
- Report on Liquidity Measures
- Risk Dashboard
- Review of Authorizations Under PSD2
Keywords: Lending, Single Rulebook, EU, Basel, CRD, Europe, Banking, Reporting Framework 3 2, PSD2, EBA, Reporting, Liquidity Risk, Taxonomy
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