EBA Sets Out Work Priorities and Deliverables for 2021
EBA published its annual work program for 2021. The work program describes the activities and deliverables for the coming year in the context of the six key strategic areas of work. In 2021, the focus will be on supporting deployment of the risk-reduction package, implementing effective resolution tools, enhancing the stress testing framework, integrating quantitative Pillar 3 disclosure data with supervisory reporting data, strengthening operational resilience of banking sector, and addressing management and disclosure of environmental, social, and governance (ESG) risks. EBA will also continue to work toward addressing the aftermath of COVID-19 pandemic and establishing a culture of sound and effective governance and good conduct in financial institutions.
In terms of the work to be done in the key strategic areas, the work program details and lists all the key deliverables of EBA for 2021, along with the expected delivery timelines. The following are the six strategic focus areas of the work program for 2021:
- Supporting deployment of the risk-reduction package and implementation of effective resolution tools. The full implementation of the new Capital Requirements Directive/Regulation (CRD/CRR), Banking Recovery and Resolution Directive (BRRD), and Investment Firm Directive/Regulation (IFD/IFR) legislative packages will remain a fundamental priority in 2021. EBA will deliver mandates according to the priorities set in 2019 and outlined in the different roadmaps. EBA will also prepare technical standards, guidelines, and reports to support the timely implementation of the new prudential regime for investment firms. EBA will continue to work to foster the increase of the loss absorbency capacity of the EU banking system and will facilitate the operationalization of the resolution tools.
- Enhancing stress testing framework in EU. EBA, in conjunction with the competent authorities and the Single Supervisory Mechanism, plans to design, at the earliest, a new methodology to be introduced for the 2023 EU-wide stress test. However, the EU-wide stress test, which has been postponed to 2021, following the COVID-19 outbreak will follow a similar structure in terms of methodology, sample, and timing of the 2020 exercise stable. The methodology for the 2021 exercise will likely remain the same, except for the correction of few clerical errors and the incorporation of certain issues (related to foreign exchange, moratoria, public guarantees, and other changes in the regulation).
- Becoming an integrated EU data hub. From 2021 onward, quantitative Pillar 3 data will be integrated with supervisory reporting data to the greatest possible extent and EBA will act as a hub for Pillar 3 disclosure. The scope of the data to be collected is also expected to expand soon. Among other requirements, EBA will collect resolution data for the entire banking population. With the new CRD/CRR package, a new register for investment firms will be established and some supervisory data will be collected for these entities too. Furthermore, EBA will strengthen its role in the anti-money laundering/combating the financing of terrorism (AML/CFT) supervision by national authorities and it will have to strengthen its role in the collection, analysis, and dissemination of information related to money laundering and terrorist financing risks and to AML/CFT supervision. EBA will collect payment fraud data under the EBA guidelines on fraud reporting.
- Contributing to financial innovation and operational resilience. EBA will continue to focus on ensuring technological neutrality in regulation and supervisory approaches. Specific areas of work will include "platformisation," regulatory and supervisory technologies, further work on operational resilience, and understanding developments in crypto-assets, artificial intelligence, and big data.
- Building infrastructure in EU for AML/CFT supervision. EBA will continue to lead policy development and promote effective and consistent policy implementation by national competent authorities. In 2021, EBA will gather qualitative and quantitative information to build a database to foster the exchange of information between national competent authorities and to support the new AML colleges.
- Developing policies for factoring in and managing ESG risks. EBA will produce the report on incorporation of ESG into risk management of institutions and supervision, setting out policy direction, indicators, and methods on ESG-related governance, risk management, and supervision. EBA will also prepare the implementing technical standards on ESG disclosures in Pillar 3, outlining the qualitative and quantitative information on ESG factors. In addition, EBA will support and monitor market efforts to improve approaches to scenario analysis and stress testing. EBA will continue to participate in global, European, and national initiatives in this regard.
Related Links
Keywords: Europe, EU, Banking, Stress Testing, Reporting, Basel, BRRD, Resolution Framework, COVID-19, Credit Risk, ESG, CRR, IFR, AML/CFT, Work Program, Implementation Timeline, EBA
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.
Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.
Previous Article
CBIRC and PBC Establish CCyB Mechanism in China, Set CCyB at 0%Related Articles
BIS Quarterly Review Discusses Developments in Fintech and ESG Space
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
BCBS to Consult on Supervisory Practices for Climate Risks by Year-End
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
OCC Identifies Operational Risk Deficiencies in MUFG Union Bank
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
EC Rule on Contractual Recognition of Write Down and Conversion Powers
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
ECB to Consider Climate Risks When Reviewing Collateral Framework
In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.
SRB Provides Update on Approach to Prior Permissions Regime
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
APRA Issues Further Guidance on Application of Securitization Standard
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
ACPR Publishes Corrective Version of RUBA Taxonomy
The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.
Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.
