The European Banking Authority (EBA) launched today a public consultation on draft Guidelines providing clarity on the application of the limited network exclusion requirements, which certain payment instruments might benefit from, as laid down in the revised Payment Services Directive (PSD2). Such payment instruments include store cards, fuel cards, public transport cards, and meal vouchers. Given the significant inconsistencies the EBA has identified on how this exclusion is applied across the EU, the proposed Guidelines aim at clarifying specific aspects of its application, including on how a network of service providers or a range of goods and services should be assessed in order to qualify as ‘limited’, the use of payment instruments within limited networks, the provision of excluded services by regulated financial institutions and the submission of notification to competent authorities (CAs). The consultation runs until 15 October 2021.
In line with its statutory objective of contributing to the convergence of supervisory practices, the EBA arrived at the view that it should issue own-initiative Guidelines aimed at bringing about convergence on a number of issues related to the application of this exclusion.
In particular, the draft Guidelines propose requirements, and where relevant, criteria and indicators, aimed at ensuring that excluded payment instruments are used in a limited way, thus reducing potential risks that may arise for the users of such instruments.
In addition, in order to address potential concerns on any possible circumvention of the PSD2 requirements and to increase transparency for consumers who may not be aware that they do not benefit from the protection the PSD2 provides to regulated services, the draft Guidelines propose requirements on the provision of excluded services by regulated firms.
Finally, to ensure transparency on the provision of excluded services, the draft Guidelines provide clarity on the calculation of the thresholds set out in Article 37(2) of the PSD2, the submission of the related notifications to competent authorities and the information to be covered in the description of the excluded activity on the national and EBA registers.
However, the proposed Guidelines cannot address all the inconsistencies that the EBA has identified, as the EBA is not in a position to change definitions or amend legal requirements set out in the PSD2.
Responses 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 15 October 2021.
All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will take place online on 8 September 2021 from 10.00 to 12.00 CEST.
Following the publication of PSD2 in November 2015, the EBA and the European Commission (EC) have received a number of queries on the interpretation and application of the exclusion under Article 3(k) of the PSD2 and the related notification requirements articulated in Article 37 of the PSD2. The EBA assessed these queries and arrived at the view that the implementation and application of the requirements diverges significantly between Member States, thus impeding the Single Market for payment services in the EU and creating opportunities for regulatory arbitrage.
The EBA issued the draft Guidelines under Article 16 of the EBA Regulation, which mandates the Authority to issue guidelines and recommendations addressed to Competent Authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices, including, where appropriate, to conduct open public consultations.
Article 3(k) of Directive (EU) 2015/2366 on payment services in the internal market (PSD2) specifies that the ‘Directive does not apply to services based on specific payment instruments that can be used only in a limited way, that meet specified conditions.
Article 37(2) of PSD2 prescribes that ‘Member States shall require that service providers carrying out either of the activities referred to in points (i) and (ii) of point (k) of Article 3 or carrying out both activities, for which the total value of payment transactions executed over the preceding 12 months exceeds the amount of EUR 1 million, send a notification to competent authorities containing a description of the services offered, specifying under which exclusion referred to in point (k)(i) and (ii) of Article 3 the activity is considered to be carried out.’
The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) specifying the requirements for originators, sponsors, original lenders and servicers related to risk retention, in line with the Securitisation Regulation. The RTS aim to clarify requirements relating to risk retention, thus reducing the risk of moral hazard and aligning interests. The RTS also provide clarity on new topics, including risk retention in traditional securitisation of non-performing exposures (NPE). The consultation runs until 30 September 2021.
The RTS carry over a substantial amount of provisions from the EBA RTS on risk retention submitted to the European Commission in July 2018. The RTS also include a number of new provisions, such as specifying modalities of risk retention in traditional NPE securitisations and specifying requirements for the expertise of servicers acting as a retainers in such NPE securitisations. In addition, the RTS address some specific issues, related, for instance, to the impact of fees payable to the retainer on risk retention, risk retention in re-securitisations or in securitisations of own issued debt instruments. They also provide clarification on the treatment of synthetic excess spread.
By providing additional clarity on risk retention in case of portfolios of NPE, this publication is also part of the EBA comprehensive work on supporting the functioning of the secondary markets for NPE. For more information about the EBA work on NPE you can read here.
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 30 September 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will take place online on 14 September 2021 from 11:00 to 12:00 Paris time.
These draft RTS have been developed on the basis of Article 6(7) of Securitisation Regulation (Regulation (EU) 2017/2402), as amended by the Capital Market Recovery Package (Regulation (EU) 2021/557), which mandates the EBA to specify in greater detail the risk retention requirement in securitisation.
The European Banking Authority (EBA) launched today a public consultation on its revised Guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing. The comprehensive revisions aim at implementing the recent amendments to the Capital Requirements Directive (CRD V) and Capital Requirements Regulation (CRR II), as well as aligning with other regulatory developments and best supervisory practices. The consultation runs until 28 September 2021.
SREP is an ongoing supervisory process bringing together findings from all supervisory activities into a comprehensive supervisory overview of an institution. These Guidelines aim at achieving convergence of practices followed by competent authorities across the EU in their SREP and supervisory stress testing processes.
The current review of the SREP Guidelines affects all main SREP elements, including (i) business model analysis, (ii) assessment of internal governance and institution-wide control arrangements, (iii) assessment of risks to capital and capital adequacy to cover these risks, and (iv) assessment of liquidity and funding risks and adequacy of liquidity resources to cover such risks. The main amendments implementing the requirements laid down in the CRD V and CRR II include the following:
Comments to the two consultations can be sent to the EBA by clicking on the "send your comments" button on the respective consultation page. Please note that the deadline for the submission of comments is 28 September 2021.
A public hearing will take place on 31 August 2021 from 11:00 to 12:30.
All contributions received will be published following the end of the consultation, unless requested otherwise.
These draft Guidelines have been developed on the basis of Article 107(3) of Directive 2013/36/EU, which mandates the Authority to further specify the common procedures and methodologies for the SREP.
The EBA Guidelines will apply to competent authorities across the EU. Once the revised Guidelines will enter into force, the current SREP Guidelines will be repealed.
The European Banking Authority (EBA) launched today a public consultation on amendments to its Regulatory Technical Standards (RTS) on credit risk adjustments in the context of the calculation of the Risk Weight (RW) of defaulted exposures under the Standardised Approach (SA). The proposed amendments follow up on the European Commission’s Action Plan to tackle non-performing loans in the aftermath of the COVID-19 pandemic, which indicated the need for a revision of the treatment of defaulted exposures under the SA. This update is necessary to ensure the prudential framework does not create disincentives to the sale of non-performing assets. The consultation runs until 24 September 2021.
The Commission’s Action Plan specifically asks the EBA to consider the appropriate regulatory treatment of defaulted assets, as laid out in the Capital Requirements Regulation (CRR), which have been sold at a discount, i.e. NPL sales. Under the current regulatory framework, the capital charge for a defaulted exposure may – under certain circumstances - increase after its sale from a risk weight of 100% on the seller’s balance sheet to a risk weight of 150% on the balance sheet of the credit institution buying the assets.
The proposed amendment to the existing RTS on credit risk adjustments introduces a change to the recognition of total credit risk adjustments, which ensures that the risk weight can remain the same in both cases. In particular, the price discount stemming from the sale will be recognised as a credit risk adjustment for the purposes of determining the risk weight.
By implementing this change through an RTS amendment, the EBA aims at clarifying the regulatory treatment of sold NPL assets. However, the EBA also recommends that the treatment set out in this RTS be included in the Commission’s considerations as part of the revised Capital Requirements Regulation (CRR3) proposal, which is expected at a later stage.
Comments on the 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 24 September 2021.
A public hearing will take place via conference call on 13 July 2021 from 11:00 to 12:00 CEST.
All contributions received will be published after the consultation closes, unless requested otherwise.
The European Banking Authority (EBA) launched today a public consultation to amend its Implementing Technical Standards (ITS) on Supervisory Reporting with regards to COREP and asset encumbrance reporting as well as the reporting for the purposes of identifying global systemically important institutions (G-SIIs). Among others, this consultation paper aims to enhance proportionality in the area of asset encumbrance reporting, as recommended by the EBA’s Report on the Study on the Cost of compliance with supervisory reporting requirements (CoC report). The consultation runs until 23 September 2021.
In response to the Capital Markets Recovery Package (CMRP), the reporting on securitisations needs to be amended to keep it aligned with the prudential requirements. Furthermore, the EBA is proposing some minor amendments to COREP (reporting on own funds and own funds requirements) in order to obtain a deeper understanding of institution’s use of the option to exempt certain software assets from the deduction from own funds.
Following the proposals for enhanced proportionality on asset encumbrance reporting, small and non-complex institutions will be exempted from the reporting of more granular data, as proposed in the CoC report. Besides that, this consultation paper suggests changing the definition of the level of asset encumbrance.
Regarding the reporting of information for determining G-SIIs and assigning G-SII buffer rates, the EBA is proposing to slightly expand the scope of application of the reporting obligation, to include standalone entities, and not only banking groups, that meet the relevant criteria.
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 23 September 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 9 July from 10:30 to 11:30 CET. The EBA invites interested stakeholders to register using this link by 6 July, 16:00 at the latest. The dial-in details will be communicated after the registration deadline.
These draft ITS have been developed in accordance with Article 430 of Regulation (EU) No 575/2013, which mandates the EBA to develop and specify uniform formats, definitions, frequencies and reference and remittance dates and IT solutions for the reporting to supervisory authorities.
The EBA expects to submit these draft ITS to the European Commission in Q4 2021 or Q1 2022. The revised requirements are envisaged to apply from the reference date 31 December 2022.
The European Banking Authority (EBA) published today a consultation paper on draft Regulatory Technical Standards (RTS) specifying the information that crowdfunding service providers offering individual portfolio management of loans shall provide to investors in relation to the method to assess credit risk, and on each individual portfolio. The draft Regulatory Technical Standards also specify the policies, procedures and organisational arrangements that crowdfunding service providers shall have in place in relation to any contingency fund they may offer to investors. The consultation runs until 4 September 2021.
In order to reduce the information asymmetry between crowdfunding service providers and investors, as well as to ensure transparency and adequate protection for investors, the latter should have access to all relevant information about the composition of the portfolio, including the projects where their funds are invested, as well as the quality of the loans financing these projects.
Investors are exposed not only to risks connected to the projects or the loans in which their funds are invested, but also to the way the crowdfunding service provider assesses the risk of these loans and projects and how it manages the selection of loans for the portfolio.
Against this backdrop, these draft RTS require crowdfunding service providers to show that the measurement techniques used for credit risk assessments are based on a sufficient number of elements and are appropriate to the complexity and level of the risks underlying i) the single projects; ii) the portfolio; iii) the project owners. In addition, the draft RTS set out the information that crowdfunding platforms must disclose referring to several key characteristics of each loan included in a certain portfolio.
Finally, as crowdfunding service providers may offer a dedicated contingency fund to compensate investors for the losses they may incur, in case project owners do not reimburse their loans, the draft RTS specify adequate policies, procedures and governance arrangements that providers should have in place when managing, either directly or through a third party provider, contingency funds.
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 4 September 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 20 July 2021 from 11:00 to 12:30 CET. The EBA invites interested stakeholders to register using this link. The dial-in details will be communicated in due course.
These draft RTS have been developed according to Articles 6(7) of Regulation (EU) No 1503/2020 (European Crowdfunding Service Providers Regulation - ECSPR), which mandates the EBA to develop, in close cooperation with the European Securities and Market Authority (ESMA), draft RTS to specify:
The European Banking Authority (EBA) launched today a public consultation on draft implementing technical standards (ITS) on Pillar 3 disclosures regarding exposures to interest rate risk on positions not held in the trading book (IRRBB). The draft ITS put forward comparable disclosures that would allow stakeholders to assess institutions’ IRRBB risk management framework as well as the sensitivity of institutions’ economic value of equity and net interest income to changes in interest rates. The proposed standards will amend the comprehensive ITS on institutions’ public disclosures, in line with the strategic objective of developing a single and comprehensive Pillar 3 package that should facilitate implementation by institutions and further promote market discipline.
The draft ITS propose qualitative disclosures on how institutions calculate their IRRBB exposure values based on their internal measurement systems and on institutions’ overall IRRBB objective and management. They also provide quantitative disclosures about the impact of changes in interest rates on institutions’ economic value of equity and net interest income.
In addition, given the ongoing EBA work on the policy framework for IRRBB, the EBA is proposing transitional provisions that should facilitate institutions’ disclosures while the policy frameworks is being finalised.
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 30 August 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 30 June 2021 from 11:00 to 12:30 CET. The EBA invites interested stakeholders to register using this link (by no later than 28 June 2021, 16:00).
The dial-in details will be communicated in due course.
Article 448 of Regulation (EU) No 575/2013 (‘CRR’) requires institutions to disclose, as from 28 June 2021, quantitative and qualitative information on the risks arising from potential changes in interest rates that affect both the economic value of equity and the net interest income of their non-trading book activities referred to in Article 84 and Article 98(5) of the Directive 2013/36/EU (Capital requirements directive- CRD).
The EBA has developed the draft ITS following the mandate in Article 434a of Regulation (EU) No 575/2013. These ITS will amend the Implementing Regulation (EU) No 637/2021 of 15 March 2021 with the aim to facilitate the institutions’ compliance to Article 448 CRR.
When developing these proposals, the EBA has built on BCBS’s Pillar 3 disclosure framework.
The EBA expects to submit these draft ITS to the European Commission in October 2021.
The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) on a central database on anti-money laundering and countering the financing of terrorism (AML/CFT) in the EU. This database will be a key tool for the EBA’s recently enhanced mandate to lead, coordinate and monitor AML/CFT efforts in the European Union. The consultation runs until 17 June 2021.
The revised EBA Regulation that came into effect in January 2020 requires the EBA to establish and keep up to date a central database with information on AML/CFT weaknesses that competent authorities (CAs) across the EU have identified in respect of individual financial institutions. The database will also contain information on the measures competent authorities have taken to rectify those material AML/CFT weaknesses. Information from this database will be used by individual competent authorities and the EBA to make the fight against ML/TF in the EU more targeted and effective in the future.
The draft RTS proposed in this Consultation Paper specify the definition and the materiality of weaknesses identified by competent authorities, the type of information collected, and how such information will be communicated to the EBA. It also sets out how the EBA will analyse and disseminate the information contained in the AML/CFT central database.
Moreover, the draft RTS set out the rules to ensure the effectiveness of the database, the confidentiality of the data contained in the database, as well as how the database will interact with other notifications that competent authorities are required to provide to the EBA and the provisions to ensure the protection of personal data.
The AML/CFT central database will be a key tool in coordinating efforts to prevent and counter ML/TF in the Union. It will serve as an early warning tool to enable the competent authorities to act before the ML/TF risks crystalise and help them plan their on-site inspections and perform off-site monitoring.
The Consultation Paper is composed of the draft RTS as well as an Annex that sets out, firstly, the technical specifications with the data points that will be contained in the database and, secondly, the list of authorities that will be indirectly submitting to the AML/CFT database in accordance with article 13(7) of the draft RTS. As those technical specifications are not part of the draft RTS, the EBA is not required to consult on them but has decided to offer the respondents the possibility to provide comments also on those.
Comments to the draft Consultation Paper can be sent by clicking on the "send your comments" button on the EBA's consultation page. The deadline for the submission of comments is 17 June 2021.
All contributions received will be published following the close of the consultation, unless requested otherwise.
In parallel, the EBA is seeking the view of the European Data Protection Supervisor (EDPS) on these draft RTS, in accordance with Article 42(1) of the Regulation (EU) 2018/1725 (EUDPR). The response of the EDPS will be taken into consideration when the final report on this draft RTS will be developed.
The proposed RTSs have been developed in fulfillment of the mandates conferred on the EBA in Articles 9a(1) and (3) of the EBA Regulation. As part of the mandate to lead, coordinate and monitor AML/CFT in Europe, said Articles require the EBA to develop two RTSs to establish and keep up to date an AML/CFT central database. The mandate foresees for the AML/CFT central database to contain information on AML/CFT weaknesses that have been identified by competent authorities and on the measures taken by them in response to those material weaknesses. Given the complementary character of those RTS, the EBA has drafted them as a single instrument.
The EBA has performed a Data Protection Impact Assessment (DPIA) in accordance with Article 35 of Regulation (EU) 2018/1725 (EUDPR). The DPIA analyses the risks arising from the processing of personal data and establishes the controls that will be put in place by the EBA to mitigate the risks identified. A summary of this draft DPIA is published on the EBA’s website for full transparency alongside the Consultation Paper.
The European Banking Authority (EBA) launched today a public consultation on its draft Guidelines on the delineation and reporting of available financial means (AFM) of Deposit Guarantee Schemes (DGSs). The purpose of the Guidelines is to ensure that only funds that credit institutions contributed, or that stem indirectly from such contributions such as recoveries or investment income, will count towards reaching the target level of the DGS fund. Conversely, funds that stem directly or indirectly from borrowed resources should not count towards the target level. This clarification aims at preventing the situation where a DGS could meet the target level by taking out a loan.
By developing these Guidelines, the EBA follows up on its recommendations made in the EBA Opinion on deposit guarantee scheme funding and uses of deposit guarantee scheme funds (“the Opinion”) published on 23 January 2020. In the Opinion, the EBA identified differences across Member States in relation to the interpretation of the concept of AFM. The Opinion recommended clarifying Directive 2014/49/EU (DGSD) that borrowed funds or funds stemming from borrowed funds should not count towards reaching the minimum target level for DGS funds.
Given that a review of the DGSD is still several years away from being proposed, negotiated and finalised, the proposed Guidelines provide such a clarification ahead of any such changes, using the existing DGSD as a legal basis. More precisely, the draft Guidelines clarify that AFM are comprised of two subsets:
In terms of reporting, the proposed Guidelines will extend the reporting requirements from DGSs to the EBA in order to reflect the clarified concept of AFM, QAFM and other AFM proposed earlier in the Guidelines. They also require the reporting on outstanding liabilities of DGSs, unclaimed repayments, and high-level information on alternative funding arrangements that are in place. That information would be published on the EBA website annually and should provide more transparency and comparability of the financial position of DGSs across the EU.
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 28 July 2021. All received contributions will be published at the end of the consultation, unless requested otherwise.
A public hearing will take place via conference call on Monday 28 June 2021 from 10:00 to 12:00 CEST.
These draft own-initiative Guidelines have been developed according to Articles 16(1) and 26(2) of Regulation (EU) No 1093/2010 (EBA Regulation). The Guidelines aim at harmonizing the funding of DGSs according to Article 10(1) of Directive 2014/49/EU (DGSD) and thereby strive to strengthen the European system of national DGSs in accordance with Article 26(1) of the EBA Regulation.
The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) on the list of countries with an advanced economy for calculating the equity risk under the alternative standardised approach (FRTB-SA). These RTS are part of the phase 3 deliverables of the EBA roadmap for the new market and counterparty credit risk approaches. The consultation runs until 2 July 2021.
Institutions using the alternative standardised approach to determine own funds requirements for market risk are required to compute the equity risk stemming from their trading book positions in accordance with a prescribed set of risk factors and corresponding risk weights. To determine the appropriate risk-weight, institutions are to identify whether a risk factor refers to an advanced economy or an emerging market. Risk factors mapped to the advanced economy bucket benefit from a lower risk weight compared to those mapped to the emerging market bucket.
To ensure compliance with the international standards, the consultation paper proposes a list of advanced economies corresponding to the list provided in the Fundamental Review of the Trading Book (FRTB). In this context, the EBA seeks feedback on whether the list is comprehensive, in particular, whether there are additional EU countries where the equity risk can be considered similar to the countries’ already included in the FRTB list of advanced economies. Furthermore, the EBA seeks stakeholders’ views on sources of data and criteria that could be designed to identify advanced economies and emerging markets for the purpose of FRTB-SA equity risk own funds requirements.
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 2 July 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
The public hearing on these draft RTS will take place on 29 April 2021 from 15.30 to 18.00 CEST and will be held jointly with the public hearing on draft RTS on jump to default amounts and residual risk add-on.
These draft RTS have been developed according to Article 325ap(3) of Regulation (EU) No 575/2013 (CRR), which mandates the EBA to specify what constitutes an emerging market and to specify what constitutes an advanced economy.