EBA recommendation on use of LEI for CRR supervisory reporting requirements

The European Banking Authority (EBA) has published a recommendation on the use of a legal entity identifier (LEI) for supervisory reporting requirements under the Capital Requirements Regulation (CRR).

The EBA has developed draft implementing Technical Standards on Supervisory Reporting (ITS) ensuring uniform reporting requirements across all Member States, as mandated by the CRR. The ITS cover reporting of own funds and capital requirements, financial information, large exposures, liquidity ratios, leverage ratios and asset encumbrance. In the context of the ITS and in accordance with an EBA decision on reporting, regulatory authorities in Member States have to submit to the EBA the data included in the ITS collected from a sample of institutions in their jurisdictions. For submitting data to the EBA, a single supranational identifier of banks needs to be chosen to collect and store data.

Within the recommendation the EBA demonstrates support the adoption of the legal entity identification (LEI) system proposed by the Financial Stability Board and endorsed by the G20. Whilst a global LEI system is not yet fully operational a number of entities, sponsored by national authorities, have already started to issue LEI-like identifiers (pre-LEIs) in order to satisfy local reporting requirements.

Given that a global LEI is not yet fully operational, the EBA considers that the use of pre-LEIs by national authorities is the best short-term solution, which will enhance supervisory convergence and will contribute to ensuring high quality, reliable and comparable data.

The recommendation applies from 31 January 2014. Member States must notify the EBA whether they comply, or intend to comply, with the recommendation by 29 March 2014.

View Recommendation on the use of the legal entity identifier (LEI), 29 January 2014

View Decision of the European Banking Authority on reporting by competent authorities to the EBA, 24 January 2014

EBA final draft RTS on own funds requirements for investment firms based on fixed overheads

The European Banking Authority (EBA) has published final draft Regulatory Technical Standards (RTS) on own funds requirements for investment firms based on fixed overheads.

The purpose of the RTS is to harmonise the calculation of capital requirements for those investment firms that have limited authorisation to provide investment services, as well as the conditions under which regulatory authorities in Member States can make adjustments to such requirements. The RTS are part of the Single Rulebook which is aimed at enhancing regulatory harmonisation in the banking sector in the EU.

The RTS:

  • use a so-called ‘subtractive’ approach to the calculation of fixed overheads whereby variable cost items are deducted from the total expenses as calculated according to the applicable accounting framework;
  • introduce a special treatment of tied agents, since a tied agent exposes an investment firm to the same risk it is exposed to when it carries out business on its own; and
  • introduce thresholds about which regulatory authorities in Member States can make adjustments to the capital requirements as well as minimum thresholds below which firms are exempted from the adjustments in capital requirements.

The RTS have been sent to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.

View EBA final draft regulatory technical standards on own funds requirements for investment firms based on fixed overheads under article 97(4) of Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR), 29 January 2014

EBA updates Single Rulebook Q&As: 24 January 2014

The European Banking Authority (EBA) has updated its questions and answers (Q&As) on the Single Rulebook. The Q&As relate to the CRD IV package of reforms that is the CRD IV Directive and the Capital Requirements Regulation (CRR), and the related technical standards and guidelines developed by the European Banking Authority. The updated Q&As provide answers to questions on the following issues:

  • grandfathering of own funds instruments;
  • eligibility of Tier 2 after contractual change if already in amortisation phase;
  • requirement to establish a risk/audit committee;
  • tap issues;
  • assets controlled by a liquidity management function; and
  • valuation of qualifying holdings outside the financial sector for the purposes of Article 89 of the CRR.

View Question ID: 2013_61 - Grandfathering of own funds instruments, 24 January 2014

View Question ID:2013_174 - Eligibility of Tier 2 after contractual change if already in amortisation phase, 24 January 2014

View Question ID: 2013_228 - Requirement to establish a risk/audit committee, 24 January 2014

View Question ID: 2013_238 - Tap issues, 24 January 2014

View Question ID: 2013_ 280 - Assets controlled by a liquidity management function, 24 January 2013

View Question ID: 2013_367 - Valuation of qualifying holdings outside the financial sector for the purposes of Article 89 of Regulation (EU) No. 575/2013, 24 January 2014

View Single Rulebook Q & A, 28 January 2014

ESRB decision on framework for national macro-prudential policy notifications and provision of ESRB opinions and recommendations

The European Systemic Risk Board (ESRB) has published its decision on a co-ordination framework regarding the notification of national macro-prudential policy measures by competent or designated authorities and the provision of opinions and the issuing of recommendations by the ESRB.

The Capital Requirements Regulation (CRR) and the CRD IV Directive set out several notification requirements that regulatory authorities in Member States need to observe in relation to the ESRB in the context of macro-prudential supervision. Under Article 133 of the CRD IV Directive and Article 458 of the CRR, the ESRB must provide opinions and issue recommendations on specific macro-prudential measures within one month of receiving notification of such measures.

The decision sets out the process the ESRB will follow for assessing notified measures and delivering opinions or recommendations. It also sets out the process notifying authorities must follow when providing notifications, including the use of a specified template for notifications under Article 458 (which has been published alongside the decision).

The decision enters into force on 28 January 2014.

View Decision of the European Systemic Risk Board of 27 January 2014 on a coordination framework regarding the notification of national macro-prudential policy measures by competent or designated authorities and the provision of opinions and the issuing of recommendations by the ESRB, 27 January 2014

View ESRB template for measures taken under article 458 of the Capital Requirements Regulation, 27 January 2014