Response to consultation on amending ITS on additional monitoring metrics for liquidity
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In LCR the residual maturity of retail term deposit is based on the size of penalty for early withdrawal. If the penalty is sufficiently high, it is ignored and the residual maturity is determined on the basis of the originally agreed term of the deposit. If the penalty is low, the maturity is on the contrary determined on the basis of the nearest possible term of withdrawal. A Commission Regulation will determine what is the high penalty.
In AMM the approach to retail deposits is different. Regardless of the penalty size the residual maturity is always derived from the nearest possible term of withdrawal.
This inconsistent approach will unnecessarily require from banks to implement parallel systems for monitoring the residual maturity of retail term deposit, while it will not bring any significant benefit to supervisors. On the contrary, in our view this inconsistency will complicate the data processing. We believe that the principle for determining residual maturity of retail deposits in AMM should be consistent with LCR.
Question 1: Do respondents agree to the structure and content of the maturity ladder template as proposed in Annexes XXIV and XXV, with in particular the items in the contingency section and memorandum item section? If not, would respondents have substantiated reasons for amending or not including a particular data item?
We would like to draw your attention to an inconsistent approach to retail deposits compared to their treatment in LCR.In LCR the residual maturity of retail term deposit is based on the size of penalty for early withdrawal. If the penalty is sufficiently high, it is ignored and the residual maturity is determined on the basis of the originally agreed term of the deposit. If the penalty is low, the maturity is on the contrary determined on the basis of the nearest possible term of withdrawal. A Commission Regulation will determine what is the high penalty.
In AMM the approach to retail deposits is different. Regardless of the penalty size the residual maturity is always derived from the nearest possible term of withdrawal.
This inconsistent approach will unnecessarily require from banks to implement parallel systems for monitoring the residual maturity of retail term deposit, while it will not bring any significant benefit to supervisors. On the contrary, in our view this inconsistency will complicate the data processing. We believe that the principle for determining residual maturity of retail deposits in AMM should be consistent with LCR.