EC Finalizes Rules on Internal Approaches Benchmarking Exercise
The European Commission, or EC, finalized the Implementing Regulation 2021/2017 with respect to the benchmark portfolios, reporting templates, and reporting instructions for the supervisory benchmarking of internal approaches for calculating own funds requirements. Regulation 2021/2017 amends Regulation 2016/2070 in reference to the reporting rules specified in Article 78(2) of the Capital Requirements Directive (2013/36/EU). CRD requires institutions to submit the results of their calculations, along with an explanation of the methodologies used to produce them, to the competent authorities at an appropriate frequency and at least annually. Regulation 2021/2017, which is based on the draft implementing technical standards that the European Banking Authority submitted to the European Commission, shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
Given that institutions have to submit the results of their annual calculations at least annually and that the focus of the competent authorities’ assessments and of the reports of the European Banking Authority (EBA) have changed, exposures or positions that are included in the benchmark portfolios, and therefore also reporting requirements, need to be adapted. Thus, it was appropriate to amend Annexes I to VII to the Implementing Regulation 2016/2070. Additionally, two new Annexes have been added in Regulation 2021/2017, one with the templates for reporting the International Financial Reporting Standard 9 (IFRS 9) impact and the other with the instructions for completing those templates. The IFRS 9 standard had introduced new rules for the measurement of credit losses, and, as a result, directly impacts on the amount of own funds and regulatory ratios reported.
Related Links
Effective Date: December 16, 2021
Keywords: Europe, EU, Banking, Regulatory Capital, CRR, Basel, Credit Risk, Supervisory Benchmarking, SBP, Reporting, CRD, Counterparty Credit Risk, IFRS 9, Expected Credit Loss, EC
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
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.