EBA updates risk dashboard: EBA has published an update to its risk dashboard showing the main risks and vulnerabilities in the EU banking sector in Q4 2014. The dashboard shows that:

  • EU banks' Common Equity Tier 1 (CET1) ratio was 12.1%, an increase of 50 basic points compared to 2013;
  • the impairment ratio of loans slightly decreased from the previous year to 6.6%;
  • the cost-to-income ratio (63.6% in Q4 2014) showed the highest value since 2009; and
  • as deposits increased more than loans the EU average loan‐to‐deposit ratio decreased further in Q4 2014 to 108.6% which is the lowest ratio since 2009.

(Source: EBA Updates its Risk Dashboard for EU Banking Sector)

EBA releases reporting ITS: EBA has published an interactive set of Implementing Technical Standards (ITS) on reporting to complement the standard reporting ITS which have already been published in the OJEU. The document complements the Interactive Single Rulebook which is already available on the EBA website. It is designed as a quick tool to support institutions, supervisors and all stakeholders across the EU in the implementation of this set of harmonised rules. Presented as an interactive PDF, it allows navigation through the legislative text and the corresponding clarifications provided by EBA in its Q&A tool. (Source: EBA Publishes Interactive ITS on Reporting)

EBA consults on MCD passports: EBA has published a consultation on draft guidelines for passport notifications for mortgage credit intermediaries under the Mortgage Credit Directive (MCD). These draft guidelines follow on from a December 2014 discussion paper in which respondents broadly supported EBA's proposed guidelines. The guidelines also include template notification forms for exercising the freedom to provide services and freedom of establishment. The consultation closes on 4 July. EBA intends to deliver final guidelines in Q3 2015. They would apply from 21 March 2016, the transposition date of the MCD. (Source: EBA Consults on Passport Notifications for Mortgage Credit Intermediaries)

EBA updates single rulebook Q&As: EBA has added three new items to its single rulebook Q&As. (Source: Single Rulebook Q&As)

EBA sets AMA criteria: EBA has published final draft RTS specifying the criteria that competent authorities will assess institutions against before allowing them to use advanced measurement approaches (AMA) for calculating their capital requirements for operational risk. The draft RTS:

  • set out the qualitative and quantitative requirements institutions must satisfy before they will be granted permission to use AMA to calculate their capital requirements;
  • explain how through periodic reviews competent authorities will ensure that institutions maintain the expected standards over time;
  • lay down criteria for the supervisory assessment of the key methodological components of the operational risk measurement system; 
  • provide common standards for the supervisory assessment of a bank's operational risk governance with respect to the role and responsibilities of the operational risk management function and the reporting system; and
  • establish criteria for the supervisory assessment of banks' data quality and IT systems, the requirements and terms for an institution to use its AMA in the running of its business ("use test") and the terms and the scope of audit and internal validation of the AMA framework.

EBA took feedback received during the public consultation into account when finalising these standards. Specifically, EBA clarified and amended the scope of operational risk, as well as the scope of operational risk loss, the treatment of fraud losses in the credit area and the perimeter of conduct risk events. (Source: EBA Publishes Final Draft Standards on Assessment Methodologies to Use Advanced Measurement Approaches for Operational Risk)

EBA updates on validation rules: EBA has issued a revised list of validation rules in its ITS on supervisory reporting, highlighting those which have been deactivated either for incorrectness or for triggering IT problems. (Source: EBA Issues Revised List of ITS Validation Rules)

EBA issues resolution fund advice: EBA has issued technical advice to the Commission on contributions to the Single Resolution Fund (SRF). The advice focuses on the criteria and principles EBA will use to determine the uniform level of contributions by banks in participating EU Member States to the SRF. EBA recommends a number of safeguards should be in place to ensure that the target level of the SRF (at least 1% of the amount of covered deposits of all credit institutions authorised in all of the participating EU Member States) is achieved by the end of the initial period. This means by the end of eight years from 1 January 2016 or from the date on which this provision is applicable. Contributions may, to the extent possible, exceptionally take into account pro-cyclical effects, and vary accordingly instead of being spread out evenly over the initial period. EBA's advice recommends a number of indicators for determining the phase of the business cycle and the risk of pro-cyclical effects and specifies constraints for the variations of the contribution level. This advice also specifies the criteria for determining the contribution level after a significant amount of the fund has been used to support resolution measures and the SRF needs to be replenished. In this case, similar considerations as for the initial build-up of the fund apply. (Source: EBA Issues Technical Advice to the Commission on Contributions to the Single Resolution Fund)