EBA Updates Regulatory Standards on Own Funds and Eligible Liabilities
EBA published a report on the final draft regulatory technical standards on own funds and eligible liabilities. With the revised Capital Requirements Regulation (CRR2) introducing new criteria and requirements for eligible liabilities, the amended regulatory technical standards capture several aspects of eligible liabilities as well as the changes to the own funds framework. The final standards have been sent to EC for their adoption as EU regulations that will be directly applicable throughout the EU.
The revised regulatory technical standards:
- Align existing provisions to changes introduced in the revised CRR in the area of own funds, with this being the case for provisions related to the regime of supervisory prior permission for the reduction of own funds
- Specify some of the newly introduced criteria for eligible liabilities instruments derived from the own funds regime; these include the absence of direct or indirect funding for the acquisition of ownership of eligible liabilities, the absence of incentives to redeem, and the need for the resolution authority’s prior permission for the reduction of eligible liabilities. For some of these aspects, the mandates attributed to EBA explicitly require to ensure full alignment between eligible liabilities and own funds
- Increase the calibration of the threshold for determining the predetermined amount for the general prior permission for reducing eligible liabilities instruments from 3% to 10% of the total amount of outstanding eligible liabilities instruments, post feedback received during the consultation
- Recognize some relief for the renewal of general prior permission both for own funds and eligible liabilities and for introducing a proportionate approach for liquidation entities for which their minimum requirement for own funds and eligible liabilities (MREL) does not exceed the loss absorption amount
EBA has updated the regulatory technical standards on own funds, in accordance with the original regulatory technical standard mandates granted to EBA under Articles 28(5), 29(6), 52(2), 76(4), 78(5), and 79(2) of the Capital Requirements Regulation (575/2013). The provisions of the regulatory technical standards related to eligible liabilities have been developed in accordance with Articles 72b(7) and 78a(3) of CRR.
Related Links
Keywords: Europe, EU, Banking, Regulatory Technical Standards, Own Funds, CRR2, BRRD, MREL, TLAC, Eligible Liabilities, G-SII, Basel, Regulatory Capital, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
BoE Publishes Second Working Draft of Statistics TaxonomyRelated Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
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.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
