Featured Product

    ECB Issues Risk Assessment Report and Supervisory Priorities for 2020

    October 07, 2019

    ECB published the risk assessment report and the supervisory priorities for 2020. The supervisory priorities build on an assessment of the key challenges facing supervised banks in the current economic, regulatory, and supervisory environment. The risk assessment report specifies that the three most prominent risk drivers expected to affect the euro area banking system over the next three years are economic, political, and debt sustainability challenges in the euro area; business model sustainability; and cyber crime and IT deficiencies.

    These risk drivers are followed by execution risk attached to bank strategies on non-performing loans or NPLs, easing of lending standards, repricing in financial markets, Brexit, global outlook and geopolitical uncertainties, reaction to regulation, and climate change-related risks. The risk assessment report highlights that despite a significant improvement in asset quality in recent years, high levels of nonperforming loans remain to be a concern for a large number of euro area banks. Uncertainty stemming from the potential new regulation has decreased, but banks still need to adapt to operate in the new regulatory environment. Additionally, full implementation of the Basel framework as part of the Capital Requirements Regulation/Directive (CRR III/CRD VI) package will lead to an increase in minimum capital requirements and, as a result, an aggregated capital shortfall across EU banks. 

    To ensure that banks address these key challenges effectively, ECB Banking Supervision has reviewed its supervisory priorities. The key supervisory priorities of the ECB Banking Supervision include the following:

    • Continued efforts to address the stock of non-performing loans, prevent the future build-up of new non-performing loans, and engage with impacted institutions to follow up on bank-specific supervisory expectations within a harmonized framework. 
    • Work on ensuring the adequacy of internal models used by banks in calculating their regulatory capital requirements.
    • Work toward improving banks’ internal capital and liquidity adequacy assessment processes (ICAAPs and ILAAPs) by promoting a common understanding of the ECB expectations for banks. Moreover, ICAAPs of banks will be the focus of dedicated on-site inspections. Work will also proceed on improving transparency around the risk drivers of the Pillar 2 capital requirements.
    • Continued assessment of the information technology and cyber risks facing banks by carrying out on-site inspections and monitoring these risks as part of the Supervisory Review and Evaluation Process or SREP. 
    • Conduct, in 2020, the next supervisory stress tests for significant banks. 
    • Focus on bank adherence to governance expectations in the context of each of the above activities aimed at strengthening future resilience. 
    • Monitor, along with the national supervisors, the implementation of banks’ Brexit plans and their adherence to supervisory expectations. This includes banks’ progress toward their target operating models in the euro area, within the agreed timelines.


    Related Links

    Keywords: Europe, EU, Banking, Securities, Cyber Risk, Brexit, Credit Risk, Basel III, CRR/CRD, Internal Model, Climate Change Risks, SREP, Pillar 2, Stress Testing, ECB

    Featured Experts
    Related Articles

    BIS Paper Studies Impact of Fintech Lending on Small Businesses in US

    The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.

    September 26, 2022 WebPage Regulatory News

    UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks

    The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).

    September 26, 2022 WebPage Regulatory News

    EBA Launches EU-Wide Transparency Exercise in 2022

    The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.

    September 23, 2022 WebPage Regulatory News

    SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks

    The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."

    September 22, 2022 WebPage Regulatory News

    EC Rule Lists Advanced Economies for Market Risk Capital Calculations

    The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.

    September 21, 2022 WebPage Regulatory News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8521