European Mortgage Federation-European Covered Bond COuncil
The European Mortgage Federation - European Covered Bond Council (EMF-ECBC) has read the EBA Consultation Paper on Draft Regulatory Technical Standards (RTS) on Independent Valuers with interest and would like to make the following general comment:
The EMF-ECBC acknowledges the appropriateness of valuers being legally, structurally and operationally separate from the resolution authorities and the institutions subject to valuation and their affiliate undertakings in the context of bank resolution, and the EMF-ECBC furthermore acknowledges that, in this particular context, these requirements equate to ‘independence of the valuer’.
However, the EMF-ECBC would like to take this opportunity to underline that in other contexts, notably in the context of the valuation of property for lending purposes, independent valuers can be either internal or external to the lender. What is important here is that there are adequate mechanisms in place to ensure that all valuers, both internal and external, are protected from undue influence from commercial units and from the participants in the transaction.
With this important principle in mind, the EMF-ECBC is very pleased to note the EBA’s recent acknowledgement that an internal valuer can be considered independent for the purposes of Article 229(1) of the Capital Requirements Regulation (CRR), provided he/she possesses the necessary qualifications, ability and experience to execute a valuation and is independent from the credit decision process. This principle was also recognised by the EU Institutions during the negotiations on the Mortgage Credit Directive , and internal valuers are subsequently explicitly recognised in the text in a similar way. Incidentally, the EMF-ECBC has prepared extensive guidelines on independence of the valuer, which describe this principle in more detail (see attached document).
The EMF-ECBC would also like to comment specifically on the requirement that valuers “possess the necessary qualifications, experience, ability and knowledge in all relevant subjects and in particular in economics accounting, and finance, including banking. Whilst acknowledging the reasons why this would appear to be desirable, the EMF-ECBC is concerned that the qualification in accounting means that this task can only be carried out by auditors. Furthermore, the banking expertise requirement would appear to further reduce the pool of valuers available to perform the valuation. The EMF-ECBC therefore questions the feasibility of this requirement."