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
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
EP Reaches Agreement on Corporate Sustainability Reporting Directive
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
PRA Consults on Model Risk Management Principles for Banks
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
EC Regulation Amends Standards for Calculating Credit Risk Adjustments
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
UK Authorities Issue Regulatory and Reporting Updates for Banks
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
BCBS Issues Climate Risk Principles while HKMA Expresses Its Support
The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.
