ESAs consult on qualifying holdings: The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) are consulting on updating the guidelines for assessing changes in control in the regulated sector. The guidelines address the prudential considerations for regulators when they receive applications for changes in qualifying holdings. The guidelines look at:

  • what regulators should consider to be acting in concert or having a significant influence;
  • how regulators should view indirect acquisitions;
  • factors to consider in assessing whether there has been a decision to acquire;
  • proportionality;
  • information necessary to enable regulators to make an assessment and the application and assessment process;
  • the five key prudential assessment criteria on reputation of the acquirer; regulation and experience of those who will direct the target's business; financial soundness of the acquirer; compliance with relevant prudential requirements of the target; and suspicion of money laundering or terrorist financing by the acquirer; and
  • information sharing and co-operation between authorities. 

There will be a public hearing on 20 August and the consultation closes on 2 October. (Source: ESAs Consult on Qualifying Holdings)

EBA agrees Commission amendments on currencies with constraints: EBA has issued an opinion to the Commission that supports amending the draft Regulatory Technical Standards (RTS) on derogations for currencies that feature constraints on the availability of liquid assets. EBA has sent amended RTS to the Commission agreeing the Commission's amendments. (Source: EBA Agrees Commission Amendments on Currencies with Constraints Opinion)

EBA updates Q&As: EBA has added a new question to the Questions and Answers (Q&As) on the single rulebook. (Source: EBA Updates Q&As)

EBA publishes banking sector risk assessment: EBA's latest six-monthly report on the risks and vulnerabilities of the EU banking system covers the six-month period to 12 June. EBA points out in a cover note that, as a result, it does not address the current challenges posed by the situation in Greece. Even so, although it notes increased strength of capital, it concludes the markets remain fragile and volatile, although there has been no real challenge to accessing funding. It also notes banks may need to make further changes to their business models, although many have already introduced change. (Source: EBA Publishes Risk Assessment of the European Banking System

EBA finalises BRRD RTS: EBA has published its final draft RTS under the Bank Recovery and Resolution Directive (BRRD) on:

  • notifications and notice of suspension: They specify the process and the information required, for firms to notify to their supervisors, and for the supervisors in turn to notify the resolution authorities, when a banking institution under their supervision is failing or likely to fail. They also address where the authorities consider a bank is failing or likely to fail and there is no reasonable alternative to it doing so;
  • operational organisation of resolution colleges and the resolution planning process;
  • the minimum requirement for own funds and eligible liabilities (MREL): These clarify how each institution's capital requirements should be linked to the amount of MREL needed to absorb losses. EBA says the standards should be consistent with FSB recommendations;
  • the contractual recognition of bail-in: These help to determine the cases in which the requirement to include the contractual term for recognising the bail-in power cross-border does not apply. In particular, there will be no requirement where an adequate statutory regime in the relevant third country or an international agreement exists which provides for an administrative or judicial procedure to secure recognition of the application of the write-down and conversion powers by an EU resolution authority. Following consultation, the RTS now say that liabilities that are fully secured in accordance with EU regulatory requirements or equivalent third country law need not include the contractual term. Finally, they specify the minimum contents of the contractual term. EBA says it aims to strike a balance between the need for harmonisation and the need for flexibility to take account of any issues arising in relation to a specific third country law, type of liability or arbitrage risk. See also our article; and
  • independent valuers: These set out the general criteria for assessing valuers to determine whether they comply with the legal requirement of independence for the purposes of performing valuation tasks under the BRRD.

It also issued final form Implementing Technical Standards (ITS) on the eligibility of institutions for simplified obligations in the context of recovery planning, resolution planning and resolvability assessments and on the procedures, forms and templates for submitting information on resolution plans.

(Source: EBA Finalises BRRD Notifications RTSEBA Finalises Resolution College RTSBail-In RTSand EBA Publishes Independent Valuers RTS and EBA Issues Final Form ITS)

EBA consults on capital requirements for mortgage exposures: EBA is consulting on RTS addressing conditions for regulators to take into account when tightening capital requirements for mortgage exposures. It asks for comments by 6 October. (Source: EBA Consults on Capital Requirements for Mortgage Exposures)

EBA publishes securitisation advice: EBA has published its full advice to the Commission on qualifying securitisations. EBA proposes a more risk-sensitive approach to capital regulation for long-term securitisation instruments, and for asset-backed commercial paper. It wants to lower the capital charges in the newly published revision of the Basel securitisation framework to recognise the relative lower riskiness of qualifying products, while always keeping regulatory capital within the perimeter of a prudential surcharge. (Source: EBA Publishes Securitisation Advice)