The EBA introduces enhanced proportionality in supervisory reporting

• Reporting requirements for small institutions are significantly reduced in the area of additional liquidity monitoring metrics (ALMM) and asset encumbrance. 
• The amendments to the reporting are a step forward in the implementation of the EBA’s recommendations on cost reduction measures included in its study on the cost of compliance with supervisory reporting requirements.
• Additional amendments to the templates are proposed with the aim of implementing changes to regulatory requirements, streamlining reporting requirements, filling in data gaps and further clarifying the reporting instructions.

The European Banking Authority (EBA) published today its final draft Implementing Technical Standards (ITS) on supervisory reporting with respect to common reporting (COREP), asset encumbrance, global systemically important institutions (G-SIIs) and additional liquidity monitoring metrics (ALMM). Proportionality was a key consideration in the proposed changes, making reporting requirements better suited to the size and risk of the institutions.

Following the recommendations of its cost of compliance Study, the EBA introduced the necessary amendments that will exempt small and non-complex institutions (SNCIs) from reporting several liquidity metrics, including the concentration of funding by product type, the funding price for various lengths of funding, information on roll-over of funding, as well as more granular data on asset encumbrance. The EBA also implements simplifications for medium-sized institutions, which will be exempted from reporting liquidity metrics on roll-over of funding.

Besides enhancements to the proportionality of the reporting framework, the EBA also introduced some changes to reflect amendments to the prudential framework and bring the reporting up to date in the light of changing user needs. The reporting on securitisation has been amended to implement the changes to the prudential requirements brought by the Capital Markets Recovery Package (CMRP). With respect to the reporting on own funds and own funds requirements, the EBA introduced some minor amendments to obtain a deeper understanding of institutions’ use of the option to exempt certain software assets from the deduction from own funds. Furthermore, the definition of the level of asset encumbrance has been amended. Regarding the reporting of information for identifying G-SIIs and assigning G-SII buffer rates, the EBA has expanded the scope of application of the reporting obligation, to include standalone entities that meet the relevant criteria, and not only banking groups.

Legal basis and next steps

These final draft ITS have been developed in accordance with Article 415(3a) of Regulation (EU) No 575/2013 which mandates the EBA to draft implementing technical standards to specify which additional liquidity monitoring metrics shall apply to small and non-complex institutions. Furthermore, these ITS are based on Article 430(7) of Regulation (EU) No 575/2013 which mandates the EBA to develop uniform formats, definitions, frequencies and reference and remittance dates and IT solutions.

The first reference date for the application of these technical standards is 31 December 2022. The final draft ITS are part of the 3.2 reporting framework release, and the technical package will be published in the first quarter of 2022.