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.
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
Related Articles
NGFS Updates Address Short-Term Climate Scenarios and Transition Plans
The Network for Greening the Financial System (NGFS) is exploring the development of short-term climate scenarios to complement its existing scenario framework of long-term climate scenarios.
ISSB Updates Address ESG Issues while IASB Consults on Impairments
The International Sustainability Standards Board (ISSB) is seeking feedback, until August 09, 2023, on the exposure draft that sets out the methodology proposed by ISSB to amend the Sustainability Accounting Standards Board (SASB) Standards' metrics
OSFI to Review Liquidity Adequacy Guidelines and Policy Architecture
The Office of the Superintendent of Financial Institutions (OSFI) is consulting, until June 21, 2023, on a review of the liquidity treatment provided in the Liquidity Adequacy Requirements (LAR) Guideline for wholesale funding sources with retail-like characteristics.
ESRB Publishes Report on Cryptos and DeFi; ECB Updates on Digital Euro
The European Systemic Risk Board (ESRB) published a report that outlines the systemic implications of crypto markets and proposes policy options to address the risks stemming from crypto-assets and decentralized finance or DeFi.
EU Agencies Issue Updates on DORA, ESAP, and Crowdfunding Regulation
The European Supervisory Authorities (ESAs) published a discussion paper on their joint advice to the European Commission (EC) on proposals to specify criteria for critical information and communication technology (ICT) third-party service providers
ESAs Propose ESG Disclosure on STS Securitization, Issue Other Updates
The Joint Committee of the three European Supervisory Authorities (ESAs) proposed to amend the Implementing Regulation 2016/1799 on the mapping of External Credit Assessment Institutions' (ECAIs) credit assessments.
UK Authorities Issue Updates, Finalize Policy on Model Risk Management
The Prudential Regulation Authority (PRA) finalized the model risk management principles for banks, the policy statement PS5/23 on risks from contingent leverage, and PS4/23 on moving senior managers regime forms from the PRA Rulebook.
APRA Revises Implementation Timeline for Operational Risk Standard
The Australian Prudential Regulation Authority (APRA) updated the implementation date of the new cross-industry prudential standard CPS 230 on operational risk management
BCBS Consults on Basel FAQs and Amendments, Issues Other Updates
The Basel Committee on Banking Supervision (BCBS) published a report assessing implementation of the global Basel standards on net stable funding ratio (NSFR) and large exposures (LEX) in South Africa
EBA Announces Multiple Regulatory and Reporting Updates in April 2023
The European Banking Authority (EBA) published consultations on the amendments to the guidelines on risk-based anti-money laundering and countering the financing of terrorism (AML/CFT) supervision
