Featured Product

    Andreas Dombret of Bundesbank Speaks on Regulatory Proportionality

    September 25, 2017

    Dr. Andreas Dombret of the Deutsche Bundesbank spoke about the German proposal on regulatory proportionality, at the strategy conference of the Rhineland Savings Banks and Giro Association on August 29, 2017. The speech focused on regulatory proportionality for small banks and savings banks with a regional footprint and examined how the regulatory landscape might evolve for these banks.

    He examined the chronology of actions taken and the ways explored toward embedding the principle of proportionality more deeply within the regulatory and supervisory frameworks. He also discussed the EC proposals for strengthening proportionality as part of the general overhaul of EU banking regulation, which is still an ongoing process. “These proposals would make major changes to the small print, and I am certain that we will be able to roll out a number of meaningful initial improvements. That said, the proposals don't go far enough—which is why we thought ahead.” To this end, he highlighted that a German discussion paper was put before the competent expert group of the EC in June this year. The paper proposes two paths toward greater proportionality and discusses the pros and cons of each: one path involves adjusting the existing regulatory framework and the second path involves creating a dedicated regulatory framework for small institutions (small banking box).


    According to Dr. Dombret, the German proposal adopts a three-tiered approach to greater proportionality. In this proposal, systematically important institutions with the potential to pose systemic risk will be subject to Basel III in full while medium-sized institutions will be provided with selective relief. A stand-alone supervisory regime, known as small banking box, has been proposed for the small, less complex institutions. The paper then proposes a classification criteria for categorizing the institutions into these three tiers. It proposes no proportionality for risk-based capital ratios, leverage ratio, and liquidity coverage ratio, emphasizing “that a lot of rules are not up for debate” and “that the very purpose of our joint proposal is to avoid unnecessarily high amounts of paperwork.” It is to be noted that this debate is now at the European level and the government, supervisors, and German banking industry unanimously hold a joint position. He concludes that “we must present a united German front. If we in Germany do not manage to all stand behind the small banking box concept, we will have a hard job convincing other European countries.

     

    Related Link: Speech

    Keywords: Europe, EU, Germany, Proportionality, Basel III, Small Banking Box, Bundesbank, BIS

    Featured Experts
    Related Articles
    News

    MAS Concludes Blockchain Payments Prototype Shows Commercial Potential

    MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.

    July 13, 2020 WebPage Regulatory News
    News

    PRA Publishes Public Working Draft of XBRL Taxonomy 1.2.0 for Insurers

    PRA published a public working draft, or PWD, of version 1.2.0 of the BoE Insurance XBRL taxonomy, along with the related technical artefacts.

    July 13, 2020 WebPage Regulatory News
    News

    CPMI Report Sets Out Building Blocks to Enhance Cross-Border Payments

    CPMI published a report that sets out nineteen building blocks for a global roadmap to improve cross-border payments.

    July 13, 2020 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    APRA Updates Reporting Validation Rules in July 2020

    APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    July 10, 2020 WebPage Regulatory News
    News

    PRA to Partly Apply EBA Guidelines on Disclosures for COVID Measures

    PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.

    July 10, 2020 WebPage Regulatory News
    News

    EBA Updates List of Correlated Currencies Under CRR

    EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.

    July 10, 2020 WebPage Regulatory News
    News

    ESMA Guides on Securitization Repository Data Consistency Thresholds

    ESMA published the final report on the guidelines on securitization repository data completeness and consistency thresholds.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5477