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 Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
