EBA launches consultation to amend standards on benchmarking of internal models

17 December 2020

The European Banking Authority (EBA) published today a consultation paper proposing to amend the EU Commission’s Implementing Regulation on the benchmarking of credit risk, market risk and IFRS9 models so as to include some new elements for the 2022 exercise. The EBA benchmarking exercise forms the basis for both supervisory assessment and horizontal analysis of internal models. It ensures consistent monitoring of the impact of the several different supervisory and regulatory measures aiming at the harmonising capital requirements in the EU.

For each of the three areas, the EBA is proposing to include the following new elements: i) for credit risk, additional information on the level of conservatism embedded in the IRB risk parameters; iii) for market risk, new sensitivities related to the so-called sensitivities-based method, in line with the new FRTB framework; and iii) for the IFRS9 exercise, updated templates with the collection of additional IFRS 9 parameters.

Consultation process

Responses to the consultations 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 15 February 2021.

A public hearing on this consultation will take place on the 20 January 2021 from 11:00 to 13:00 CET. Deadline for registration is 18 January 2020 at 16:00 CET.

Legal basis

These draft Implementing Technical Standards (ITS) amending the Commission’s Implementing Regulation on the benchmarking of credit risk, market risk and IFRS9 models, have been developed in accordance with article 78 of the Capital Requirements Directive (CRD), which requires the EBA to specify the benchmarking portfolios, templates and definitions to be used as part of the annual benchmarking exercises. These are used by competent authorities to conduct an annual assessment of the quality of internal approaches used for the calculation of own funds requirements.

EBA launches consultation on its new Guidelines on internal governance for investment firms

17 December 2020

The European Banking Authority (EBA) launched today a public consultation on its new Guidelines on internal governance under the Investment Firms Directive (IFD), specifying the governance provisions that Class 2 investment firms should comply with, taking into account the proportionality principle. This governance framework aims at ensuring that investment firms have a clear organisational structure, effectively manage their risks  and have adequate internal control mechanisms in place. The consultation runs until 17 March 2021.

In line with the proportionality principle and to take account of the specificities of investment firms, the consultation paper specifies a number of governance provisions laid down in the IFD, including the tasks, responsibilities of the management body as well as the organisation of investment firms. The aim of these provisions is to ensure the sound management of risks across all lines of defence as well as the adoption of transparent structures to allow the supervision of all investment firms’ activities.

In addition, the consultation paper provides details on the establishment of a risk culture, a code of conduct and the management of conflicts of interest, also in relation to related parties’ transactions to ensure that firms have appropriate decision management and oversight processes for such transactions.

To ensure that investment firms groups take a holistic approach to their risk management, the draft Guidelines apply at both individual and consolidated level.

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 17 March 2021.

A public hearing will take place on 17 February 2021 from 14: 00 to 16:00.

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

Legal basis and next steps

These draft Guidelines have been developed in accordance with Article 26 of Directive 2019/2034/EU, which requires firms to have robust governance arrangements, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility, processes and mechanisms and mandates EBA to develop Guidelines in this area.

The EBA Guidelines will apply to competent authorities across the EU, as well as to investment firms (Class 2) on a solo and consolidated basis.

EBA launches consultation on its new Guidelines on remuneration policies for investment firms

17 December 2020

The European Banking Authority (EBA) launched today a public consultations on its new Guidelines on remuneration policies under the Investment Firms Directive (IFD). This guidance specifies the remuneration provisions that Class 2 investment firms should comply with, taking into account the proportionality principle.  Sound remuneration policies ensure an alignment of the variable remuneration of identified staff with the risk profile of the investment firm and the assets it manages, and they must be gender neutral. The consultation runs until 17 March 2021.

While the remuneration framework for investment firms is largely aligned to the one for credit institutions, some differences exist. These Guidelines specify those provisions, including the application of waivers to the requirement to pay out a part of the variable remuneration of identified staff under deferral arrangements and in instruments and the setting of a ratio between variable and fixed remuneration.

The draft Guidelines apply at both individual and consolidated level.

Consultation process

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 17 March 2021.

A public hearing will take place on 17 February 2021 from 14: 00 to 16:00.

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

Legal basis, background and next steps

These draft Guidelines have been developed in accordance with Articles 26 and 32 of Directive 2019/2034/EU, which require firms to have gender neutral remuneration policies and mandates EBA to develop Guidelines in this area.

The principle of equal pay for male and female workers for equal work or work of equal value is laid down in Article 157 of the Treaty on the Functioning of the European Union (TFEU). Institutions need to apply this principle in a consistent manner.

The EBA Guidelines will apply to competent authorities across the EU, as well as to investment firms (Class 2) on a solo and consolidated basis.

EBA consults on technical standards to calculate risk weights of collective investment undertakings

16 December 2020

The European Banking Authority (EBA) launched today a consultation on Regulatory Technical Standards (RTS) on the calculation of risk-weighted exposure amounts of collective investment undertakings (CIUs) in line with the Capital Requirements Regulation (CRR). The proposed draft RTS, which will contribute to the calculation of own funds requirements for the exposures in the form of units or shares in CIUs under the Standardised Approach for credit risk, clarify the regulatory treatment for missing inputs when the underlying risk of derivatives is unknown and for the computation of the exposure value for counterparty credit risk. The consultation runs until 16 March 2021.

These proposed RTS clarify how the exposure amounts of CIUs, under the mandate-based approach (MBA), should be calculated, when one or more of the inputs required for such calculation are not available. Moreover, the draft RTS explain what is considered as insufficient information versus missing inputs, and clarifies whether market measures provide sufficient information for the application of the MBA for exposures to CIUs.

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

A public hearing will take place online on 11 February 2021 from 11.00 to 13.00 Paris time.

Legal basis and background

These draft RTS have been developed on the basis of Article 132a(4) of Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR), which mandates the EBA to specify how institutions shall calculate the risk-weighted exposure amount in the context of the mandate-based approach where one or more of the inputs required for that calculation are not available.

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ESAs notify the Chair of the Trustees of the IFRS Foundation on global sustainability standards

16 December 2020

The Chairs of the three European Supervisory Authorities (ESAs), EBA, EIOPA and ESMA, submitted a letter today to Mr Erkki Liikanen, Chair of the Trustees of the IFRS Foundation, regarding the Foundation consultation on sustainability reporting. In their letter, the Chairs agree that improving data availability and public disclosure by corporates is a key element to foster sustainable growth, and strongly support the development of globally accepted non-financial reporting standards to facilitate the disclosure of meaningful and comparable metrics on environmental, social and governance aspects. They also support that international standards should build on existing jurisdictional and international initiatives, including those of the European Union.

EBA issues revised list of ITS validation rules

10 December 2020

The European Banking Authority (EBA) issued today a revised list of validation rules in its Implementing Technical Standards (ITS) on supervisory reporting, highlighting those, which have been deactivated either for incorrectness or for triggering IT problems. Competent Authorities throughout the EU are informed that data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules.

Piers Haben speaks at the European Association for Banking and Financial Law event

20 November 2020

Piers Haben, Director of the Banking, Markets, Innovation and Consumers department at the EBA, spoke about a multi-layered approach to regulation at the event "What to regulate? How to regulate? Who should regulate?" organised by the European Association for Banking and Financial Law. In his speech, Piers Haben highlighted the EBA's approach towards innovative applications of technology in the financial sector in accordance with the principle of technological neutrality.

 

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José Manuel Campa opens the 2020 EBA Policy Research Workshop

12 November 2020

José Manuel Campa, Chairperson of the European Banking Authority (EBA) delivered today his openings remarks at the 2020 EBA Policy Research Workshop on the impacts, risks and opportunities of new technologies in the banking sector. The Chairperson underlined the importance of the application of new technologies in the banking sector in a period of increased experimentation and roll-out of new technologies across the EU financial sector and immense technology-enabled change.

EBA announces timing for publication of 2020 EU-wide transparency exercise and Risk Assessment Report

11 November 2020

The European Banking Authority (EBA) announced today that its 2020 Risk Assessment Report and transparency exercise with bank by bank data will be released on Friday 11 December at 18:00 CET.

 

Jose Manuel Campa delivers keynote speech at the XVII international professional conference on good corporate governance

10 November 2020

Jose Manuel Campa, Chairperson of the European Banking Authority (EBA) delivered today a keynote speech at the XVII International Professional Conference on Good Corporate Governance, where he highlighted the corporate governance challenges faced by the financial sector.