Featured Product

    EBA Proposes Revised Standards for Own Funds and Eligible Liabilities

    May 29, 2020

    EBA published a consultation paper on the draft amended regulatory technical standards on own funds and eligible liabilities. The draft regulatory technical standards align the existing provisions to changes introduced in the revised Capital Requirements Regulation (CRR) in the area of own funds. The consultation on amended regulatory standards ends on August 31, 2020. The final draft regulatory standards will be subsequently submitted to EC for endorsement before being published in the Official Journal of the European Union.

    Last year, European legislators adopted a series of measures, including the “Risk Reduction Measures Package” that complements the existing banking framework to lower risks of failure, reduce the severity of failure, and minimize costs to the tax payer. Part of these risk reduction measures consists in applying targeted adjustments to the own funds framework set out in CRR to reflect EU specificities and a few broader policy considerations. In parallel, the CRR and the Bank Recovery and Resolution Directive (BRRD) have been amended to implement, in EU, the total loss absorbing capacity (TLAC) standard agreed upon for global systemically important institutions (G-SIIs) at the G-20 table. Own funds and eligible liabilities’ requirements have been set out alongside capital requirements to reinforce loss absorption capacity for banks, both going-concern and in resolution. EBA has historically been mandated to further specify some of the conditions of the own funds regime. With the introduction of eligible liabilities instruments in CRR, EBA is mandated to specify the eligible liabilities regime, in some cases with an explicit obligation for both regimes to be fully aligned. To ensure consistency across the spectrum of instruments with similar loss absorption features, it is necessary to approach both sets of mandates together.

    For this reason, EBA has chosen to deal with the own funds regime and the eligible liabilities regime in a single set of regulatory technical standards. This consultation paper puts forward draft amendments to the Commission Delegated Regulation No 241/2014 with regard to the regulatory technical standards own funds requirements for institutions, which are now also applicable to eligible liabilities instruments. The consultation paper elicits stakeholder views on the design of the new provisions. With the revised Capital Requirements Regulation (CRR) introducing new criteria and requirements for eligible liabilities, these amended regulatory technical standards capture several aspects of eligible liabilities as well as the changes to the own funds framework. The changes also relate to the provisions for the regime of supervisory prior permission for the reduction of own funds and market making. The draft amended regulatory technical standards specify some of the newly introduced criteria for eligible liabilities instruments derived from the own funds regime, including the:

    • Absence of direct or indirect funding for the acquisition of ownership of eligible liabilities
    • Absence of incentives to redeem
    • Need for the resolution authority’s prior permission for the reduction of eligible liabilities

     

    Related Links

    Comment Due Date: August 31, 2020

    Keywords: Europe, EU, Banking, CRR, BRRD, Own Funds, Eligible Liabilities, Regulatory Technical Standards, TLAC, Resolution Framework, EBA

    Featured Experts
    Related Articles
    News

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News
    News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8597