Austrian Federal Economic Chamber, Division Bank and Insurance

Currently, we do not see it beneficial to limit the provisions to hedging the CET1 ratio as it would confine the scope contrary to the CRR. The CRR explicitly states that the positions shall be taken to “hedge against the adverse effect of the exchange rate on its ratios in accordance with Article 92 (1)”. Therefore, a restriction to hedging the CET1 ratio would not be in line with the CRR, rendering it void. Within banking groups, some entities might issue capital instruments in the local currencies. The FX risk stem-ming from these positions needs to be managed from a group perspective.

Institutions should be free to decide which capital ratio they choose. Despite of the bank’s internal strategy and the composition of the balance sheet, the targeted ratio defines also the amount of maximum position to be exempted and consequently the size and hedging strategy for remaining open positions. Choosing CET1 ratio gives the smallest amount for MaxOp and therefore the highest amount of remaining Open Position to be hedged. Hedging strategy and size of hedges will be influenced by market liquidity, cost of hedging (negative carry) and risk estimation in the respective currency.
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From our perspective, using only 3 material currencies as a starting point is too restrictive.
We expect that at least 5 currencies will be in scope of a request for permission. Thus, we would suggest to change the wording in para 19 accordingly and generally extend the scope.

The decision on which and how many currencies banks are planning to request permission depends on whether the JST will invoke the current permission. If they do invoke the permission because of changes in the framework, banks will probably (re-)apply for RUB, CZK, RON, HUF, HRK, UAH, ALL, BAM, BGN, RSD, BYN.

Although, banks currently comply with requirements requested by the authorities, banks have a diverging legal opinion regarding on the necessity of including all assets into the calculation of the net open position. Please see legal opinion above.
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No comments, paragraph 25 seems to be reasonably clear.
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Due to the extremely limited space given in the answer box, please see our extensive comments in the attached file.
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Due to the extremely limited space given in the answer box, please see our extensive comments in the attached file.
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Due to the extremely limited space given in the answer box, please see our extensive comments in the attached file.
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Due to the extremely limited space given in the answer box, please see our extensive comments in the attached file.
Due to the extremely limited space given in the answer box, please see our extensive comments in the attached file.
Due to the extremely limited space given in the answer box, please see our extensive comments in the attached file.
Due to the extremely limited space given in the answer box, please see our extensive comments in the attached file.
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No.
Dr. Franz Rudorfer
A