Response to consultation on Handbook on independent valuers for resolution
1. Do you have suggestions to improving the RAs’ preparatory arrangements?
The European Group of Valuers’ Associations (TEGOVA) unites 74 national valuers’ associations from 38 countries representing 70 000 qualified valuers either self-employed or employed by specialist consultancies, private sector companies, government departments or financial institutions both local and international. Its European Valuation Standards (EVS) are cited as reliable standards for the valuation of residential immovable property for mortgage lending purposes in the EU Mortgage Credit Directive and have been given precedence over all other standards by the European Central Bank in successive editions of its Asset Quality Review manual for the updating of banks’ real estate collateral values. Five TEGOVA experts participated in the EBA workshop of 29 April on Valuer Independence in Resolution.
We congratulate EBA for an excellent effort at balancing the tendering playing field so that it is not needlessly skewed in favour of Big 4 valuation service providers. In particular, we appreciate the following provisions:
40 The RAs could engage in discussions with the identified valuers as additional preparatory work.
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42 Where the RA engages in contact with the valuers, the RA could ask the valuers if they would or could provide their offers as one of the parties in a joint venture or employ sub-contractors. The number of potential valuers could increase by considering ex-ante joint ventures of valuers or structures that would include sub-contractors. The joint-venture or subcontracting would form, in principle, a response to the RA tender in order to address specific areas such as geographic presence, specialised areas of competence or simply to ensure sufficient capacity given the size of the institution and required time to delivery. Valuers might offer to the RA their view on what resources would be need for different institutions or entities sizes and how these might be set-up via joint ventures or subcontractors.
It is, however, important not to dilute or even contradict this with other text, in particular:
44 The Delegated Regulation (EU) 2016/1075 requires the RAs to consider as an element of independence the necessary qualifications, experience, ability and knowledge in all matters considered relevant by the appointing authority. Therefore, as a best practice, the RAs should aim to complement the list of names of suitable valuers with this information using public sources. Moreover, the RAs could rank the valuers based on those elements and could set certain thresholds of institutions/group’s size where smaller valuers would likely not to be suitable.
The last sentence contradicts and dilutes paragraph 42 and makes total abstraction of joint venturing and subcontracting. At the Paris meeting and in the follow-up correspondence with [EBA staff edit to remove EBA staff name] of 3 May 2024, we explained at length that many high-standing valuation firms other than the Big 4 have great experience of joint venturing and subcontracting for big projects on tight deadlines in the same manner as Big 4 national member firms joint venture and subcontract between themselves for big service proposals or projects on tight deadlines. There is no objective reason to favour Big 4 firms.
We suggest deletion of the last sentence of paragraph 44.
Separately, we suggest the following self-explanatory amendment to paragraph 35:
35 As a best practice, RAs should broaden their research also to valuers from outside of their MS (e.g. EU wide) with adequate local industry and market experience to expand their list of possible available and suitable valuers.
[EBA staff edit to remove name and contact details of the submitter]