EBA calls for a simplified and more harmonised large exposures regime
The European Banking Authority (EBA) published today its response to the European Commission's call for advice of 26 April 2016 on the review of the large exposures framework laid down in the Capital Requirements Regulation (CRR). The EBA's response has been provided in the form of a report divided in three different sections and including also recommendations to entrust the EBA with additional mandates to further simplify and harmonise the large exposures regime. This report will support the Commission in its review of the large exposures framework as part of the overall CRR review.
In particular, in the first section, the EBA analyses the impact of aligning certain aspects of the EU large exposures regime with the standards on large exposures produced by the Basel Committee on Banking Supervision (BCBS). In this respect, the EBA considers appropriate to strengthen the large exposures capital base by including only Tier 1 capital instead of allowing also a proportion of Tier 2 capital, as it is currently the case.
The second section deals with the five exemptions identified in the call for advice, which might be currently used by institutions subject to the discretion of competent authorities or Member States. The EBA recommends removing three of the five exemptions and, more generally, highlights the importance of reducing exemptions and discretions, where appropriate, so as to further enhance the alignment with the BCBS standards and to achieve consistency across jurisdictions.
In the third section, the EBA considers other aspects that could be aligned to the BCBS standards or other issues that require further work and quantifies the impact, where possible. For example, it quantifies the impact of no longer allowing institutions to reduce the exposure values by the value of immovable property used as collateral.
Finally, the report draws attention to the Q&As submitted by stakeholders through the EBA Q&A tool, which have identified possible errors, inconsistencies and material issues in the current CRR large exposure text and recommends they are taken into account in the review of the large exposures regime.
The EBA's competence to deliver an Opinion is based on Article 34(1) of the Regulation establishing the Authority, as prudential requirements for large exposures relate to the EBA's area of competence.
EBA report on the review of the large exposures regime (EBA-Op-2016-17)
(910.1 KB - PDF) Last update 24 October 2016
Call for Advice on Large exposures (EBA-2016-E-675)
(197.38 KB - PDF) Last update 24 October 2016
Franca Rosa Congiu