Featured Product

    Peter Praet of ECB on Enabling Pan European Banks in Banking Union

    September 05, 2018

    While speaking at the Eurofi Financial Forum 2018 in Vienna, Peter Praet of ECB talked about creating an enabling environment for pan-European banks in the Banking Union. He highlights that, in recent years, the European Union has achieved major progress toward financial integration. EU now has a single supervisor and a single resolution authority, with banks being subject to the same European rulebook.

    The Banking Union also contributes to providing effective mechanisms for cross-border risk-sharing and broadening the sources of funding within a country, thereby promoting macroeconomic stability and growth. However, the following obstacles that hinder the fungibility of capital and liquidity of banking groups can still be observed:

    • Number of national options and discretions are hindering the practical application of cross-border liquidity waivers within the Union.
    • The proposal to have cross-border capital waivers within the EU was not taken forward in the ongoing review of the CRR, which is a missed opportunity. Some national authorities are concerned about the possible financial stability implications of the proposal. However, such concerns could be addressed by making the waivers subject to additional prudential safeguards and by putting in place appropriate transition arrangements that account for the planned further progress on the Banking Union.
    • The major progress made in Banking Union needs to be recognized in the international regulatory framework. The international regulatory framework should recognize the progress that has been made in the Banking Union and exclude intra Banking Union positions from the cross-jurisdictional indicators in the global systemically important bank (G-SIB) methodology.
    • The allocation of internal minimum requirement for own funds and eligible liabilities (MREL) has turned out to be an area of tension between national jurisdictions. Jurisdictions with a foreign bank subsidiary prefer to have a high pre-positioning of internal MREL to ensure an orderly resolution of its local subsidiary. However, this implies a certain degree of ring-fencing to the detriment of the foreign parent bank. The compromise reached by member states in the Council only allows that internal MREL is waived if the resolution entity and the subsidiary are located in the same member state. To account for the progress in terms of joint supervision and resolution among euro area countries, internal MREL waivers on a cross-border basis in the Banking Union should be allowed, as this would contribute to continuous cross-border banking. Therefore, it should also be possible to use guarantees to replace internal MREL and allow for more flexibility in the allocation of resources within the Banking Union.

     

    Related Link: Speech

    Keywords: Europe, EU, Banking, Banking Union, Pan-European Banking, Orderly Resolution, ECB

    Related Articles
    News

    EBA Provides Clarity on Implementation of Certain COVID-19 Policies

    EBA published a report on the implementation of selected COVID-19 policies within the prudential framework for banking sector.

    July 07, 2020 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    BCBS published the eighteenth progress report on implementation of the Basel III regulatory framework in member jurisdictions.

    July 06, 2020 WebPage Regulatory News
    News

    BCBS Amends Guidelines on Sound Management of AML/CFT Risks

    BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).

    July 02, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Amendments to Swap Margin Rule

    US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.

    July 01, 2020 WebPage Regulatory News
    News

    PRA Letter Sets Expectations on Approach to Managing Climate Risks

    PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.

    July 01, 2020 WebPage Regulatory News
    News

    EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR

    EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).

    July 01, 2020 WebPage Regulatory News
    News

    FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform

    FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.

    July 01, 2020 WebPage Regulatory News
    News

    IAIS Publishes List of Internationally Active Insurance Groups

    IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.

    July 01, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act

    FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).

    July 01, 2020 WebPage Regulatory News
    News

    EC Launches Consultation on Review of Solvency II Directive

    EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.

    July 01, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5433