Response to consultation on amending Guidelines on the appropriate subsets of exposures in the application of the systemic risk buffer
Q6. Do you have any additional comments on these draft Guidelines amending EBA/GL/2020/13 on the appropriate subsets of sectoral exposures to which competent or designated authorities may apply a systemic risk buffer?
We believe that, as a purely European instrument that is not rooted in the Basel framework and lacks international harmonization, the SyRB undermines the competitiveness of EU banks. Furthermore, there is a risk that the activation of the SyRB would result in redundancies and overlaps with other capital requirements (P1, P2, G-SII, O-SII and CCyB), thereby unnecessarily complicating the capital framework without making a clear additional contribution to financial stability. Introducing additional guidance on the SyRB risks would lead to an unnecessary overlap with existing buffers and would add complexity without delivering a clear benefit for financial stability. Instead, the SyRB should be removed from the EU’s macroprudential framework, as already demanded repeatedly.
Additionally, the macroprudential framework should not be used to address emerging risks such as ESG, geopolitical or cybersecurity risks, as the Systemic Risk Buffer is not an agile instrument capable of responding effectively to rapidly evolving challenges. The macroprudential framework is unsuitable for clearly identifying risk exposures associated with climate risks. Furthermore, extending the SyRB to cover climate risks makes its application arbitrary. Even the EBA’s efforts to supplement the guidelines with granular criteria do nothing to change this. This would merely make the capital buffer framework more complex.
The current prudential architecture already provides comprehensive tools under Pillar 1 and Pillar 2, including the Supervisory Review and Evaluation Process (SREP), enabling supervisors to address both institution-specific and system-wide risks in a targeted and proportionate manner. This means that institutions must assess their exposure to climate risks on an individual basis. It is therefore both reasonable and necessary to address climate risks exclusively through the micro-framework.
Furthermore, in the light of the EU’s current agenda on regulatory simplification and competitiveness, expanding the scope and operational complexity of the SyRB appears inconsistent with broader policy objectives. It risks increasing fragmentation, compliance costs and uncertainty.
Against this backdrop, we completely reject the revision of EBA/GL/2020/13. We believe it would be more effective to refrain from making individual adjustments until a decision has been reached on the comprehensive revision of the capital buffer framework currently under political discussion.