22 July 2020
As part of its drive for more proportionate regulatory and supervisory framework, the European Banking Authority (EBA) is looking for ways to optimise supervisory reporting requirements and reduce reporting costs for institutions, especially smaller ones. To fulfil this mandate the EBA launched a questionnaire addressed to all European banks and a call for case studies to collect evidence on reporting costs as well as industry views on ways to reduce such costs and make the supervisory reporting more efficient. The EBA expects the responses to the questionnaires and case studies in October 2020.
The questionnaire addressed to all EEA credit institutions and the call for fact-finding case studies are essential elements in the EBA work of assessing the cost of compliance with the supervisory reporting requirements.
The cost of compliance study focuses on (1) understanding the actual reporting costs incurred by institutions in relation to supervisory reporting, and in particular in relation to the EBA implementing technical standards (ITS) on supervisory reporting, (2) assessing the effects of a reduction of some specific reporting requirements on costs and supervisory effectiveness; and (3) assessing whether the reporting costs were proportionate with regard to the benefits delivered.
The final report to be developed by the EBA following the analysis of the industry responses will include recommendations on how to reduce reporting costs for the banking industry as a whole and, in particular, for small and non-complex institutions by looking at both technological improvements and reducing some reporting requirements, where the costs outweigh the benefits.
To deliver on mandate, the EBA needs to collect quantitative and qualitative information on the historical reporting costs and benefits of reporting, as well as the evidence-based views on possible changes to the reporting requirements or processes aimed at reducing the cost and increasing efficiencies.
The questionnaire launched today aims to understand the reporting costs, their cost drivers as well as the benefits and to identify challenging areas of reporting. It also looks into the effectiveness of proportionality measures put in place in the past and first ideas on how to make reporting even more efficient and proportionate in the future.
Following the discussion with various EU-level and national industry trade bodies, the EBA has split the questionnaire into two parts with different deadlines for responses, in order to take due account of the priorities and challenges faced by the institutions in the current COVID-19 environment. Responses to the qualitative questions are expected by 1 October 2020, while responses to the quantitative questions as well as the submission of case studies are expected by 31 October 2020.
Answering the questionnaire and submitting case studies are of voluntary nature. The EBA, however, would appreciate wide industry participation to ensure that the input into the analysis, and thus the basis for developing the recommendations, is of good quality and representative for the EU banking sector.
The EBA is mandated by Article 430(8) of the CRR to measure the costs institutions incur when complying with the reporting requirements set out in the EBA’s ITS on supervisory reporting. Such reporting costs should be assessed since the introduction of the common supervisory reporting in the EU in 2013. The EBA is also asked to assess whether these reporting costs are proportionate with regard to the benefits delivered for the purposes of prudential supervision and make recommendations on how to reduce the reporting cost at least for small and non-complex institutions. The findings from this analysis should be formulated in a report and delivered to the European Commission and European Parliament in 2021.