Featured Product

    EBA Outlines Reporting and Disclosure Expectations Amid COVID Outbreak

    March 31, 2020

    In response to the impact of COVID-19 outbreak, EBA published statements that provide guidance on the use of flexibility in supervisory reporting, clarify expectations in relation to dividend and remuneration policies, and outline the necessary measures to prevent money laundering and terrorist financing. EBA provides details on its call for competent authorities to offer leeway on reporting dates, urging one-month flexibility for reports with remittance dates between March and the end of May 2020. However, there has been no delay for reporting in accordance with the reporting framework version 2.9. EBA also called for flexibility in assessing deadlines of Pillar 3 disclosures of institutions and decided, in coordination with BCBS, to cancel the Quantitative Impact Study (QIS) based on June 2020 data.

    In its statement on supervisory reporting, EBA highlighted that, in general, institutions should be allowed up to one additional month for submitting the required data. Each competent and resolution authority should clarify the precise terms for institutions in their jurisdiction. Such exception should not apply to

    • Information on the liquidity coverage ratio (LCR) and the Additional Liquidity Monitoring Metrics (ALMM) and to the data sets identified as priority by the competent or resolution authority. These data should be reported in accordance with the deadlines specified in the applicable reporting standard.
    • Reporting for resolution planning purposes. Information on the liability structure of an institution, including intra-group financial connections, should be reported to resolution authorities by the set date in the applicable reporting standard (April 30, 2020 or earlier if set by the resolution authority).

    From March 2020 onward, the reporting framework version 2.9 will gradually replace its predecessor version 2.8. EBA is of the view that prolonging the application of version 2.8 would not provide a significant relief to institutions or authorities. Reporting in accordance with version 2.9 should therefore start, as envisaged by the adopted Implementing Act amending Regulation, with the reference date March 31, 2020.  EBA also e encouraged competent authorities to be flexible when assessing the institutions’ compliance with the deadlines for the publication of their Pillar 3 reports. The statement adds that the competent authorities and institutions should assess the need for additional Pillar 3 disclosures on prudential information that may be necessary to properly convey the risk profile of the institution in the context of the COVID-19 outbreak. In addition, in its statement on actions to mitigate financial crime risks during the COVID-19 pandemic, EBA calls on competent authorities to support ongoing efforts of financial institutions by sharing information on emerging money laundering and terrorist financing risks, setting clear regulatory expectations, and using supervisory tools flexibly.

    In its statement of dividend distribution and remuneration policies, EBA emphasizes that the capital relief resulting from the measures adopted by competent authorities in response to COVID-19 crisis are to be used to finance the corporate and household sectors and not to increase the distribution of dividends or make share buybacks for the purpose of remunerating shareholders. EBA, acknowledging that some banks have already communicated a postponement of their decisions, urges all banks to refrain from dividend distribution or share buybacks. Banks should revert to their competent authorities in case they consider themselves legally required to pay-out dividends or make share buybacks. EBA also considers that ensuring the efficient and prudent allocation of capital within banking groups is crucial and should be monitored by competent authorities. Furthermore, competent authorities should ask banks to review their remuneration policies, practices, and awards to ensure that they are consistent with, and promote, sound and effective risk management, also reflecting the current economic situation. Remuneration and, in particular, its variable portion should be set at a conservative level. To achieve an appropriate alignment with risks stemming from the COVID-19 pandemic a larger part of the variable remuneration could be deferred for a longer period and a larger proportion could be paid out in equity instruments.

     

    Related Links

    Keywords: Europe, EU, Banking, COVID-19, Reporting, Framework 2.9, Pillar 3, LCR, QIS, Resolution Planning, Disclosures, BCBS, EBA

    Featured Experts
    Related Articles
    News

    APRA Finalizes Reporting Standard for Operational Risk Requirements

    APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.

    March 03, 2021 WebPage Regulatory News
    News

    ECB Publishes Guide for Determining Penalties for Regulatory Breaches

    ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.

    March 02, 2021 WebPage Regulatory News
    News

    MAS Sets Out Good Practices to Manage Operational Risks Amid COVID

    MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.

    March 02, 2021 WebPage Regulatory News
    News

    ACPR Announces New Data Collection Application for Banks and Insurers

    ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.

    March 02, 2021 WebPage Regulatory News
    News

    BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox

    BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.

    March 02, 2021 WebPage Regulatory News
    News

    EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR

    EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).

    March 01, 2021 WebPage Regulatory News
    News

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    March 01, 2021 WebPage Regulatory News
    News

    EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models

    EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.

    March 01, 2021 WebPage Regulatory News
    News

    SRB Publishes Overview of Resolution Tools Available in Banking Union

    SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.

    March 01, 2021 WebPage Regulatory News
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6650