EBA advises on resolution: EBA has published its advice to the Commission on the resolution framework for EU banks. The advice and supporting papers look at:
- the definition of critical functions and core business lines. EBA has suggested further details to be added to the Bank Recovery and Resolution Directive (BRRD) definition and criteria to help determine what functions are critical. It suggests possible criteria also to help identify core business lines;
- delegated legislation on deferring the extraordinary ex-post contributions to financial arrangements. It notes the BRRD requirement that deferral cannot be for longer than six months and gives guidance on what authorities should consider when considering granting and renewing deferrals; and
- exclusion of liabilities from the application of the bail-in tool. EBA suggests several general criteria and principles that authorities should consider when drafting the relevant legislation.
(Source: EBA Advises on Resolution)
EBA consults on IRB proposals: EBA has published a discussion paper seeking views on its preliminary proposals to improve the Internal Ratings Based (IRB) regulatory framework. EBA will concentrate on improving the comparability of IRB approaches across institutions in the following areas:
- review of the IRB regulatory framework;
- supervisory consistency (which will include annual benchmarking exercises); and
- increased transparency based on standardised comparable templates.
EBA has identified several changes it would like to see, which it admits will result in considerable burdens on firms, especially in relation to implementation and approval. The discussion paper provides an outline of EBA's priorities and sequencing of regulatory actions. EBA will hold a public hearing on 8 April. The deadline for comment on the discussion paper is 5 May. (Source: EBA Puts Forward Preliminary Proposals to Improve the IRB Regulatory Framework)
EBA publishes leverage ratio ITS responses: EBA has published the responses to its consultation paper on Implementing Technical Standards (ITS) amending the ITS on supervisory reporting with regard to the Leverage Ratio. EBA has published eight responses from a range of industry bodies including the British Bankers' Association, the Association for Financial Markets in Europe, the European Association of Co-operative Banks and the Unicredit Group. (Source: Consultation Paper on Implementing Technical Standards Amending Commission Implementing Regulation No 680/2014 (ITS on Supervisory Reporting) with Regard to the Leverage Ratio)
EBA seeks views on records of financial contracts: EBA is consulting on draft Regulatory Technical Standards (RTS) on detailed records of financial contracts of institutions or relevant entities. The RTS ensure the information required by the BRRD should be collected in advance for institutions that are likely to be subject to resolution actions. Competent authorities and resolution authorities can get the information on request. Institutions likely to be placed into an insolvency procedure do not automatically have to keep detailed records of financial contracts. However, it remains open to authorities to impose this requirement more broadly or on an ad-hoc basis. EBA will hold a public hearing on 8 May and the consultation closes on 6 June. (Source: EBA Consults on Records of Financial Contracts)
EBA updates single rulebook Q&As: EBA has updated its single rulebook Q&As to include two new items. (Source: EBA Single Rulebook Q&As)
EBA consults on reorganisation plans: EBA has published a consultation paper on its draft RTS on the content of "Business Reorganisation Plans and Progress Reports" and Guidelines on the assessment of these plans. EBA calls for credible resolution plans, the implementation of which should restore confidence in an institution's long-term viability. Plans should, in particular, be based on prudent assumptions and ensure that any shortcomings of the institution are addressed and that there will not be any further need for resolution. The plans should also include effective measures for monitoring their own implementation. The RTS outline in detail the requirements for a resolution plan and its related progress reports. The draft Guidelines set out minimum criteria for a plan that the relevant authorities must approve. The authorities will assess the credibility of the assumptions, note the presence of concrete performance indicators in the plan and assess whether the plan is realistic, taking into account the opportunities and threats in the relevant market. EBA will host a public hearing on 11 May. The consultation closes on 9 June. (Source: EBA Defines Requirements for Business Reorganisation Plans)
EBA revises validation rules: EBA has issued a revised list of validation rules in its ITS on supervisory reporting. It has highlighted those that have been deactivated for incorrectness or causing IT issues. The updated validation rule files are available on the EBA website under "Related documents" in the "Supervisory Reporting" section. (Source: EBA Issues Revised List of ITS Validation Rules)