Featured Product

    EBA Issues Multiple Regulatory Updates for Regulated Entities

    October 06, 2022

    The European Banking Authority (EBA) published the final guidelines on transferability to support the resolvability assessment, updated the 2021 data for identifying a subset of banks as global systemically important institutions (G-SIIs), set out the Single Rulebook Question and Answer (Q&A) updates in September 2022, and updated its risk dashboard.

    The key highlights of the aforementioned updates follow:

    • The final guidelines on transferability aim at supporting the assessment of the feasibility and credibility of transfer strategies and include requirements relating to the implementation of transfer tools when considered as the preferred or variant strategies for institutions. Transferability is defined as the elements of resolvability that will facilitate the transfer of an entity, a business line or a portfolio of assets, rights and/or liabilities to an acquirer (“transfer perimeter”), a bridge institution, or an asset management company. The transferability guidelines provide guidance relating to the definition of the transfer perimeter, separability (that is, how to facilitate separation of an entity or a business from the rest of the group in resolution), and the steps to operationalize the implementation of the transfer. The transferability guidelines complement the resolvability guidelines, published on January 13, 2022. Institutions and resolution authorities should comply with these guidelines in full by January 01, 2024. The resolvability and transferability guidelines will be updated and complemented as progress is achieved on relevant policy topics, both at international and European Union levels. Moreover, EBA is currently consulting on publication of the bail-in mechanics by resolution authorities and working on the topics of resolvability testing and transparency.
    • EBA, in the context of the G-SII identification methodology and buffer rates allocation, disclosed data items specific to the recognition of the Banking Union and of institutions that are part of the Single Resolution Mechanism. The published data covers 13 indicators including the recently added trading volume indicator and updated underlying data for the 30 largest institutions in the European Union whose leverage ratio exposure measure exceeds EUR 200 billion. Data from 27 institutions shows that the aggregate amount for total exposures increased by 3.3% to EUR 20.992 billion at the end of 2021. Intra-financial system assets, assets under custody and over-the-counter derivatives increased by 37.5%, 12.2% and by 9.6%, respectively, accounting for the largest increase since 2013. Payments activity increased by 9.4%, while level 3 assets showing the largest development across all indicators with an increase of 96.3%, rising to an aggregate value above EUR 258 billion. Cross-jurisdictional liabilities and claims both increased by 19.5% and 12.3%, respectively. The data shows that no indicators have observed a decrease since end of 2020 figures. EBA, acting as a central data hub in the disclosure process, updates the data on a yearly basis and provides user-friendly tools to aggregate it across the European Union.
    • The EBA Single Rulebook Q&A tool updates for September 2022 include answers to 13 questions. The updates cover queries on topics such as credit risk, market risk, and liquidity risk. The overall objective of the Q&A tool is to ensure consistent and effective application of regulatory framework across the Single Market. Institutions, supervisors, and other stakeholders can use the Single Rulebook Q&A tool to submit questions on certain EU regulations and directives.
    • The EBA Risk Dashboard offers an overview of the main risks and vulnerabilities in the banking sector in European Union. This version of the risk dashboard notes that banks have ample liquidity buffers, but future funding conditions are becoming more challenging. It indicates that operational risk remains high due to digitalization, cyber risk, and sanction compliance challenges while credit risk does not show major signs of deterioration but the outlook is grim. The risk dashboard also indicates the potential for adverse effects of extreme weather events on the balance sheets of banks. Banks might be underestimating those risks by engaging too much capital in activities that reinforce climate change or in companies and projects with an inadequate management of climate-related risks. They might also be securing loans with assets subject to increased transitional and physical risks. Meanwhile, premiums to insure these assets against physical risks might be going up, leading some obligors to discontinue their insurance policies.

     

    Related Links

     

    Keywords: Europe, EU, Banking, Credit Risk, Transferability in Resolution, Resolvability Assessment, Disclosures, Systemic Risk, G-SIBS, Single Rulebook, Q A, Market Risk, Liquidity Risk, BCBS, FSB, Resolution Framework, Basel, Risk Dashboard, EBA

    Featured Experts
    Related Articles
    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
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8596