Consultation on draft RTS on disclosure of investment policy by investment firms

  • The draft technical standards specify the information that investment firms have to make public to show their influence over the companies in which they have voting rights.
  • The standards put forward comparable disclosures and detailed instructions on investment firms’ voting rights, voting guidelines and voting behaviour.

The European Banking Authority (EBA) published today a consultation paper on draft regulatory technical standards (RTS) on disclosure of investment policy by investment firms. The draft RTS put forward comparable disclosures that should help stakeholders understand investment firms’ influence over the companies in which they have voting rights and the impact of investment firms’ policies on aspects such as the governance or management of those companies.

The draft RTS put forward templates and tables for the disclosure of information on the investment firm’s voting behaviour, explanation of the votes, and the ratio of approved proposal, with the objective to show if the investment firm is an active shareholder that generally uses its voting rights, and how it uses them. They also include information on the use of proxy advisory firms that should help address uncertainties about potential conflicts of interest. Finally, they include information on investment firms’ voting guidelines, including, when relevant, a breakdown by geographical zone, economic sector or topic of the resolution being voted.

These disclosure requirements apply to class 2 investment firms with total assets above EUR 100 million. These firms will have to disclose this information in relation to those companies whose shares are admitted to trading on a regulated market and in which the proportion of voting rights exceeds 5 % of all voting rights issued by the company.

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 1 July 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 6 May from 11:00 to 13:00 CEST. The EBA invites interested stakeholders to register using this link.

The dial-in details will be communicated in due course

Legal basis and background

The Investment Firms Regulation (IFR) sets out in Article 52 the requirement for investment firms to disclose information on investment policy, including the following information: (1) proportion of voting rights attached to shares held, (2) voting behaviour, (3) use of proxy advisor firms and (4) voting guidelines. The same Article mandates the EBA to develop in consultation with the European Securities and Markets Authority (ESMA) draft regulatory technical standards (RTS) to specify templates for investment policy disclosure of investment firms. This information will be published on a yearly basis, along with the financial statements.

Consultation on draft revised Guidelines on recovery plans indicators

  • The revised Guidelines provide a common EU standard for the recovery plan indicators to ensure they can promptly signal a stressed situation and enable the institution to consider timely and effective recovery actions.
  • The key objective of the revised Guidelines is to strengthen the quality of the recovery indicators framework in order to ensure institutions’ effective crisis preparedness.
  • The amendments of the revised Guidelines introduce few changes to the minimum list of recovery indicators and focus on practical aspects such as calibration of the thresholds of recovery plan indicators and their monitoring.

The European Banking Authority (EBA) published today a consultation paper on its revised Guidelines on recovery plan indicators. While maintaining overall stability to the current recovery plan indicators framework, the revised Guidelines provide additional guidance on indicators’ calibration, monitoring and breaches notifications. The amendments aim at strengthening the quality of recovery indicators framework and contributing to effective crisis preparedness of institutions. 

The main objective of recovery plan indicators is to help institutions monitor and respond to the emergence and evolution of stress. The EBA issued the existing Guidelines on recovery plan indicators in 2015 but decided to amend them based on practical experience acquired in recovery planning. 

The revised Guidelines provide additional guidance on the calibration of thresholds of recovery indicators to ensure that recovery options are implemented early enough to be effective. The amendments also emphasise the importance of constant monitoring of recovery indicators and timely notification of their breaches to supervisors. Lastly, three new recovery indicators (MREL/TLAC, asset encumbrance and liquidity position) have been added to the minimum list of recovery indicators and one (cost of wholesale funding) has been removed.

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 18 June 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 15 April from 14:00 to 16:00 CET. The EBA invites interested stakeholders to register using this link.

The dial-in details will be communicated in due course.

Legal basis, background and next steps

In accordance with Article 9(1) of the Bank Recovery and Resolution Directive (BRRD), a recovery plan should include a framework of indicators established by each institution with the aim of identifying the points at which the escalation process should be activated and to assess what appropriate actions referred to in the recovery plan may be taken.

Under the mandate of Article 9(2) of BRRD, in 2015 the EBA issued Guidelines to specify the minimum list of quantitative and qualitative indicators for the purposes of recovery planning (EBA-GL-2015-02). Since the development of the Guidelines in 2015, significant practical experience in developing and assessing recovery plans has been acquired. Against this background, the EBA has concluded that, while limited amendments to its existing Guidelines are needed, it is necessary to introduce additional guidance on certain parts of the indicator framework.

The revised Guidelines are published for a three-month public consultation where the EBA is consulting only on changes to the existing Guidelines on the minimum list of qualitative and quantitative recovery plan indicators. There is no consultation on the text of the original Guidelines, which remains unchanged.

The EBA will finalise these Guidelines once the consultation responses have been assessed. Upon publication of the final Guidelines, the original ones on the minimum list of qualitative and quantitative recovery plan indicators will be repealed.

Consultation for institutions and resolution authorities on improving resolvability

The European Banking Authority (EBA) published today a consultation on Guidelines for institutions and resolution authorities on improving resolvability. These Guidelines represent a significant step in complementing the EU legal framework in the field of resolution. They aggregate existing international standards, leverage on existing EU best practices and implement them into an EU-wide legal document. The consultation runs until 17 June 2021.

These Guidelines take stock of the best practices developed so far by EU resolution authorities on resolvability topics. In particular, these Guidelines set-out requirements to improve resolvability in the areas of operational continuity in resolution, access to Financial Market Infrastructure, funding and liquidity in resolution, bail-in execution, business reorganisation and communication.

While not covering all topics relevant to resolvability either because (i) those are covered elsewhere (e.g. the calibration and eligibility of loss absorbing capacity is extensively covered in BRRD) or (ii) because those topics will be further specified in future EBA regulatory products (e.g. transferability), these Guidelines aim to be the policy point of reference for both authorities and institutions on resolvability related topics in the EU. The aim is to ensure consistent progress on resolvability for all institutions and facilitate resolvability work for cross-border groups and its monitoring in resolution colleges.

These Guidelines will be updated on a regular basis as progress is achieved on relevant policy topics, both at international and EU level.

Consultation process 

Comments to the draft Guidelines 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. 

The EBA will hold a virtual public hearing on the draft Guidelines on 20 April 2021 from 10:00 to 13:00 Paris time. The dial-in details will be communicated to those who have registered for the meeting. 

Legal basis

These own initiative guidelines are based on Article 16 of Regulation (EU) 1093/2010, 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 within the European System of Financial Supervision, and to ensuring the common, uniform and consistent application of Union law.

Consultation on revised Guidelines on risk-based AML/CFT supervision

The European Banking Authority (EBA) launched today a public consultation on changes to its Guidelines on Risk-Based Supervision of credit and financial institutions’ compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. The proposed changes address the key obstacles to effective AML/CFT supervision that the EBA has identified during its review of the existing Guidelines, including the effective use of different supervisory tools to meet the supervisory objectives. The Guidelines are central to the EBA’s mandate to lead, coordinate and monitor the EU financial sector’s fight against money laundering and terrorist financing. The consultation runs until 17 June 2021. 

The Guidelines on risk-based AML/CFT supervision were originally published by the European Supervisory Authorities (ESAs) in 2016 and set out steps that competent authorities should take to ensure compliance by credit and financial institutions with their AML/CFT obligations. Since their publication, the EBA has observed that supervisors across the EU were finding the implementation of the risk-based approach to AML/CFT supervision difficult, which meant that AML/CFT supervision was not always as effective as the legal framework set out in Directive (EU) 2015/849 (AMLD) and the ESAs’ Guidelines had envisaged.

The changes the EBA is proposing include practical step-by-step approaches to addressing those aspects of AML/CFT supervision that competent authorities have found particularly challenging. The revised Guidelines focus on helping the supervisors identify and manage ML/TF risks more effectively, including the risks that may arise from de-risking practices in some sectors or Member States by providing greater detail on ML/TF risk assessments and by requiring to develop a robust supervisory strategy and plan that are based on those risk assessments.

The Guidelines also set out how supervisors can choose the most effective supervisory tools to support different supervisory needs and objectives, and stress the importance of cooperation between different supervisory authorities, and between supervisors and other stakeholders, such as Financial Intelligence Units and financial institutions. In addition, the Guidelines emphasise the importance for supervisors to develop a good understanding of ML/TF risks associated with tax crimes, which may involve a cooperation with tax authorities in their Member State. 

Once implemented, the proposed changes will foster greater convergence of supervisory practices in areas where supervisory effectiveness has been hampered, so far, by divergent approaches in the implementation of the same European legal requirements. This means that they will significantly strengthen Europe’s AML/CFT defences.

Consultation process 

Comments to the draft Guidelines 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. 

The EBA will hold a virtual public hearing on the draft Guidelines on 22 April 2021 from 14:00 to 16:00 Paris time. The dial-in details will be communicated to those who have registered for the meeting.  

The scope of the EBA’s consultation is limited to the amendments and additions to the original risk-based supervision Guidelines, which will be repealed and replaced with the revised Guidelines. 

Legal basis and background 

Directive (EU) 2015/849 (AMLD) puts the risk-based approach at the centre of the EU’s AML/CFT regime. It recognises that the risk of money laundering and terrorist financing may vary between countries, sectors and financial institutions and that Member States, competent authorities and credit and financial institutions should identify and assess these risks in order to decide how to best manage them. 

Article 48(10) of AMLD mandates the EBA to issue Guidelines addressed to competent authorities on the characteristics of a risk-based approach to supervision and the steps to be taken when conducting supervision on a risk-based basis. The mandate requires the EBA to take specific account of the nature and size of the business, and, where appropriate and proportionate, specific measures shall be laid down. The revised Guidelines also propose to take into consideration changes in the EU legal framework that came into force since the original guidelines were first issued, as well as new international guidance by the Financial Action Taskforce (FATF) and the Basel Committee on Banking Supervision on this topic. 

ESAs consult on Taxonomy–related product disclosures

17 March 2021

The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have today issued a Consultation Paper seeking input on draft Regulatory Technical Standards (RTS) regarding disclosures of financial products investing in economic activities that contribute to an environmental investment objective. These economic activities are defined by the EU Regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation).

Press contacts

Franca Rosa Congiu

press@eba.europa.eu | +33 1 86 52 7052 | Follow @EBA_News

Consultation on draft RTS on gross jump-to-default (JTD) amounts

The European Banking Authority (EBA) launched today two public consultations on its draft Regulatory Technical Standards (RTS) on gross jump-to-default (JTD) amounts and its draft RTS on residual risk add-on (RRAO). These draft RTS specify i) how gross JTD amounts are to be determined for the purposes of calculating the default risk charge for non-securitisation instruments, and ii) how to identify instruments exposed to residual risks for the purposes of the residual risk add on (RRAO) - under the alternative standardised approach for market risk. These draft RTS are part of the phase 3 deliverables of the EBA roadmap for the new market and counterparty credit risk approaches. Both consultations run until 12 June 2021.

Institutions using the alternative standardised approach (FRTB-SA) to determine own funds requirements for market risk are required to compute, on top of the own funds requirement under the sensitivities-based method, additional own funds requirements for default risk and for residual risks. The consultation papers published today provide technical specifications for the implementation of these two elements.

In particular, the draft RTS on gross JTD amounts specify the key inputs needed for computing own funds requirements for default risk under the FRTB-SA. Gross JTD amounts determined in accordance with the draft RTS are intended to be consistent with those determined in accordance with international standards, while employing the formulae and requirements set out in the Capital Requirements Regulation (CRR).

The draft RTS on RRAO clarify the scope of the RRAO, i.e. for which instruments the own funds capital requirements for residual risks should be determined. In particular, these RTS specify a non-exhaustive list of instruments bearing residual risks, and a list of risks that, in themselves, do not constitute residual risks. These RTS also clarify that longevity risk, weather, natural disasters and future realised volatility should all be considered as exotic underlyings.

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 12 June 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.

A public hearing will take place on 29 April 2021 from 15.30 to 18.00 CET. 

Legal basis 

The draft RTS on gross JTD amounts have been developed according to Article 325w(8) of Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR), which mandates the EBA to “specify (a) how institutions are to determine the components P&Llong, P&Lshort, Adjustmentlong and Adjustmentshort when calculating the JTD amounts for different types of instruments in accordance with this Article; (b) which alternative methodologies institutions are to use for the purposes of the estimation of gross JTD amounts referred to Article 325w(7); (c) the notional amounts of instruments other than the ones referred to in points (a) and (b) of Article 325w(4)”.

The draft RTS on RRAO have been developed according to Article 325u(5) of Regulation (EU) No 575/2013 (CRR), which mandates the EBA to “specify what an exotic underlying is and which instruments are instruments bearing residual risks for the purposes of Article 325u(2)”.

Consultation on draft RTS on residual risk add-on

The European Banking Authority (EBA) launched today two public consultations on its draft Regulatory Technical Standards (RTS) on gross jump-to-default (JTD) amounts and its draft RTS on residual risk add-on (RRAO). These draft RTS specify i) how gross JTD amounts are to be determined for the purposes of calculating the default risk charge for non-securitisation instruments, and ii) how to identify instruments exposed to residual risks for the purposes of the residual risk add on (RRAO) - under the alternative standardised approach for market risk. These draft RTS are part of the phase 3 deliverables of the EBA roadmap for the new market and counterparty credit risk approaches. Both consultations run until 12 June 2021.

Institutions using the alternative standardised approach (FRTB-SA) to determine own funds requirements for market risk are required to compute, on top of the own funds requirement under the sensitivities-based method, additional own funds requirements for default risk and for residual risks. The consultation papers published today provide technical specifications for the implementation of these two elements.

In particular, the draft RTS on gross JTD amounts specify the key inputs needed for computing own funds requirements for default risk under the FRTB-SA. Gross JTD amounts determined in accordance with the draft RTS are intended to be consistent with those determined in accordance with international standards, while employing the formulae and requirements set out in the Capital Requirements Regulation (CRR).

The draft RTS on RRAO clarify the scope of the RRAO, i.e. for which instruments the own funds capital requirements for residual risks should be determined. In particular, these RTS specify a non-exhaustive list of instruments bearing residual risks, and a list of risks that, in themselves, do not constitute residual risks. These RTS also clarify that longevity risk, weather, natural disasters and future realised volatility should all be considered as exotic underlyings.

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 12 June 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.

A public hearing will take place on 29 April 2021 from 15.30 to 18.00 CET. 

Legal basis 

The draft RTS on gross JTD amounts have been developed according to Article 325w(8) of Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR), which mandates the EBA to “specify (a) how institutions are to determine the components P&Llong, P&Lshort, Adjustmentlong and Adjustmentshort when calculating the JTD amounts for different types of instruments in accordance with this Article; (b) which alternative methodologies institutions are to use for the purposes of the estimation of gross JTD amounts referred to Article 325w(7); (c) the notional amounts of instruments other than the ones referred to in points (a) and (b) of Article 325w(4)”.

The draft RTS on RRAO have been developed according to Article 325u(5) of Regulation (EU) No 575/2013 (CRR), which mandates the EBA to “specify what an exotic underlying is and which instruments are instruments bearing residual risks for the purposes of Article 325u(2)”.

Consultation on revised Guidelines on stress tests of deposit guarantee schemes

  • The EBA is consulting on the repeal and replacement of the existing Guidelines to further strengthen the DGS stress testing framework.
  • The EBA proposes to extend current requirement to ensure that all DGSs test their abilities to perform all their functions as well as access to all their funding sources.
  • The proposals aim to ensure more harmonised approaches of stress tests across the Member States and greater comparability of results.

The European Banking Authority (EBA) launched today a public consultation on its revised Guidelines on the stress tests conducted by national DGSs under the Deposit Guarantee Schemes Directive (DGSD). The proposed revision will extend the scope of the DGS stress testing, by requiring more tests that will cover additional aspects of DGS interventions. The proposed framework will also achieve greater harmonisation and comparability, to enable the EBA to carry out a robust peer review of national DGS stress tests in 2024/25.

The EBA proposes to require DGSs to stress test their ability to perform all of the interventions allowed under their legal mandates, and to access all of their funding sources. The draft revised Guidelines strengthen the cooperation between DGSs and other authorities by testing scenarios where such cooperation is necessary. In addition, the proposed new provisions require DGSs to consider testing scenarios with additional business continuity challenges, such as the pandemic, ICT failures or other similar events.

The proposed revisions are based on the findings of the first EBA peer review of the DGS stress tests and resilience of national DGSs, which the EBA published in a report in June 2020. In this report, the EBA provided early indications of areas in which the DGS stress testing framework could be improved. The EBA subsequently discussed potential amendments to the framework with schemes and competent authorities in order to develop the draft Guidelines.

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 11 June 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 Wednesday 26 May 2021 from 10:00 to 12:00 CET.

Legal basis 

These draft own-initiative Guidelines have been developed according to Articles 16(2) and 26(2) of Regulation (EU) No 1093/2010 (EBA Regulation). The Guidelines aim at enhancing the framework applicable to the stress tests that the DGSs are required to conduct in compliance with Article 4(10) of the DGSD. The Guidelines strive to strengthen the European system of national DGSs in accordance with Article 26(1) of the EBA Regulation.

Consultation on Guidelines on the authorisation of credit institutions

The European Banking Authority (EBA) published today a Consultation Paper on its Guidelines on a common assessment methodology for granting authorisation as a credit institution. The draft Guidelines are addressed to all competent authorities across the EU in charge of granting authorisation as a credit institution, and cover the authorisation requirements set out in the Capital Requirements Directive (CRD). The draft Guidelines complement the Regulatory Technical Standards (RTS) on authorization of credit institutions and contribute to the convergence of supervisory practices around market access for credit institutions across the single market. The consultation runs until 10 June 2021.

The draft Guidelines advocate for a risk-based approach and insist on the importance of consistency with the supervisory approaches applied in going concern situations. In addition, they consider the proportionality principle for all relevant assessment criteria and apply to both traditional and innovative business models and/or delivery mechanisms, as they are technology neutral.

In the context of the assessment of the application for granting an authorisation, the draft Guidelines also include guidance on money laundering or terrorist financing (ML/TF) risks and highlight the importance of cooperation with the anti-money laundering (AML) supervisor and other public bodies, in accordance the CRD.

Consultation process

Responses to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. All contributions received will be published after the consultation closes, unless requested otherwise. The deadline for the submission of comments is 10 June 2021.

A public hearing will be held on 22 April 2021 from 10:00 to 12:00 CET via conference call.

Legal basis

The draft Guidelines have been drafted in accordance with Article 8(5) CRD, which mandates the Authority to specify a common assessment methodology for granting authorisations in accordance with the CRD.

Consultation on draft ITS on Pillar disclosures on ESG risk

  • The draft technical standards provide a framework for ESG disclosures to ensure stakeholders are informed about ESG exposures and strategies and can make informed decisions and exercise market discipline.
  • The standards put forward comparable disclosures and KPIs, including a green asset ratio, as a tool to show how institutions are embedding sustainability considerations in their risk management, business models and strategy and their pathway towards the Paris agreement goals
  • The EBA has developed the Consultation paper in parallel and consistently with its advice to the EU Commission on ESG disclosures under the EU taxonomy, including a proposal for a Green Asset ratio (GAR).

The European Banking Authority (EBA) published today a consultation paper on draft implementing technical standards (ITS) on Pillar 3 disclosures on Environmental, Social and Governance (ESG) risks. The draft ITS put forward comparable disclosures that show how climate change may exacerbate other risks within institutions’ balance sheets, how institutions are mitigating those risks, and their green asset ratio on exposures financing taxonomy-aligned activities, such as those consistent with the Paris agreement goals.

Disclosure of information on ESG risks is a vital tool to promote market discipline, allowing stakeholders to assess banks’ ESG related risks and sustainable finance strategy.

In line with the requirements laid down in the Capital Requirements Regulation (CRR), the draft ITS proposes comparable quantitative disclosures on climate-change related transition and physical risks, including information on exposures towards carbon related assets and assets subject to chronic and acute climate change events. They also include quantitative disclosures on institutions’ mitigating actions supporting their counterparties in the transition to a carbon neutral economy and in the adaptation to climate change. In addition, they include a GAR, which identifies the institutions’ assets financing activities that are environmentally sustainable according to the EU taxonomy, such as those consistent with the European Green Deal and the Paris agreement goals. Finally, the draft ITS provide qualitative information on how institutions are embedding ESG considerations in their governance, business model and strategy and risk management framework.

The EBA has integrated proportionality measures that should facilitate institutions’ disclosures, including transitional periods where disclosures in terms of estimates and proxies are allowed.

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 1 June 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 29 March from 14:00 to 16:00 CET. The EBA invites interested stakeholders to register using this link.

The dial in details will be communicated in due course.

Legal basis and background

Article 434a of the Capital Requirements Regulation (CRR) mandates the EBA to develop draft implementing technical standards specifying uniform disclosure formats, and associated instructions in accordance with which the disclosures required in Part eight of the CRR shall be made. Those uniform formats shall convey sufficiently comprehensive and comparable information for users of that information to assess the risk profiles of institutions.

The ITS will amend the final draft ITS on institutions’ public disclosures with the strategic objective of defining a single, comprehensive Pillar 3 framework under the CRR that should integrate all the relevant Pillar 3 disclosure requirements. This will facilitate institutions’ implementation and enhance clarity for users of such information, as expressed in the EBA Pillar 3 roadmap.

When developing these proposals, the EBA has built on the Financial Stability Board  Task Force on Climate-related Financial Disclosures (FSB-TCFD) recommendations, the Commission’s non-binding guidelines on climate-change reporting, and on the EU Taxonomy. The EBA has developed this consultation paper in parallel and consistently with the Advice to the Commission on disclosures under Article 8 of the Taxonomy Regulation, including a common proposal for a GAR.