EBA consults on exposures to shadow banking

19 March 2015

The EBA launched a public consultation on its guidelines proposing criteria to set limits on EU institutions' exposures to shadow banking entities. The document lays out a qualitative approach for institutions to develop their internal policies for monitoring and setting appropriate limits, both at individual and aggregate levels. These guidelines will also help inform the Commission's work in relation to its report on the appropriateness and impact of imposing limits on exposures to shadow banking entities under Article 395(2) of the Capital Requirements Regulation (CRR). The consultation runs until 19 June 2015.
The EBA's Guidelines propose criteria which shall help EU institutions implement effective processes to set limits on exposures to shadow banking entities, at both aggregate and individual level. The approach aims, first of all, at ensuring that institutions have sufficient information about their counterparties in the shadow banking sector, so they can make informed decisions about their exposures to the sector in general, as well as to individual shadow banking entities.
The Guidelines also cater for those institutions that lack sufficient level of information on their exposures to shadow banking or the capacity to use such information. In this case, the Guidelines foresee a simpler approach which provides that those institutions shall set an aggregate limit of 25% of their eligible capital.
In the absence of a definition of ‘shadow banking entities' ‘banking activities' and ‘regulated framework' in EU banking legislation (CRR and CRD), the EBA proposes in its Guidelines a definition that allows capturing entities that are not subject to appropriate and sufficiently robust prudential supervision and therefore pose the greatest risks. The definitions proposed are in line with the previous EBA Opinion and Report on the perimeter of credit institutions

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 19 June 2015. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will take place at the EBA premises on 18 May 2015 from 14:00 to 17:00 UK time.

Legal basis and next steps

These draft Guidelines have been developed on the basis of Article 395(2) of Regulation (EU) No. 575/2013 (CRR). Competent Authorities across the EU will be expected to implement the Guidelines by the end of 2015