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    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    May 11, 2022

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC), EBA has developed a template, and related instructions, for the annual reporting of information on deposits subject to the Russia and the Belarus Economic Sanctions Regulations.

    Report on convergence of supervisory practices. The report finds that competent authorities made progress in the implementation of the EBA guidelines on supervisory review and evaluation process (SREP). It highlights that supervisory practices have been brought in line with the Capital Requirements Directive (CRD V), as the Pillar 2 Requirement is now legally binding across the European Union and is consistently taken into account when calculating the trigger point for the maximum distributable amount restrictions. Also, the report finds that the key topics of the 2021 convergence plan were well-incorporated and implemented into the supervisory priorities and practices, respectively, of the competent authorities. In 2021, the supervisory attention was focused on the key topics of capital and liability management, asset quality, and credit risk management, due to the close monitoring of the impact of the COVID-19 pandemic on institutions’ credit quality and the levels of their non-performing exposures. The report sets expectations for additional efforts from competent authorities in areas such as information and communications technology risks—namely cyber risk, the business model challenges, and the respective digital transformation. In addition, the report highlights the need for more harmonized practices in the determination of capital add-ons. The review found room for further convergence in the use of internal capital adequacy assessment (ICAAP) as well as in the consistent treatment of risks across the European Union and in the setting of the Pillar 2 Guidance. The conclusions of the annual EU-wide supervisory benchmarking exercise for market and credit risks, as well as the outcome of the IFRS 9 monitoring exercise, have also been summarized in the report.

    Template for reporting of deposits subject to sanctions against Russia and Belarus. To assist EC, EBA has designed a template and related instructions for the reporting of deposits falling under the economic sanctions against Russia and Belarus. The template has been made available for voluntary use by the relevant national competent authorities and by EC, with the aim to promote a convergent approach and to reduce any associated reporting costs, especially for cross-border banks. EBA is making this template available for use by the relevant competent authorities that are responsible in each member state for the monitoring of the application of the sanctions. This template is not part of the EBA reporting framework and will not be supported by any formal tools or legal documents. In addition, EBA will not be part of any data collections and will not provide a technical package for the template and reporting process.

     

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    Keywords: Europe, EU, Banking, SREP, Supervisory Convergence, CRD 5, Pillar 2, Credit Risk, Basel, Regulatory Capital, IFRS 9, ICAAP, Cyber Risk, Reporting, Russia, EC, EBA

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