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EBA provides clarity on the implementation of the reporting and disclosure framework in the context of COVID-19 measures

The European Banking Authority (EBA) published today its final draft Implementing Technical Standards (ITS) on disclosure and reporting on the G-SII requirement for own funds and eligible liabilities (TLAC) and the minimum requirements for own funds and eligible liabilities (MREL). This is the first time that the EBA has developed disclosure and reporting requirements in this area, thus expanding the scope of the existing Pillar 3 and supervisory reporting frameworks in the EU.

The European Banking Authority (EBA) published today an erratum of the reporting framework 2.10 phase 2. The package includes the Data Point Model (DPM) dictionary, table layouts and XBRL taxonomies. The correction is mostly on column 0010 of table C 114.00 in the SBP framework, where the EBA has addressed the issue of missing members.

The European Banking Authority (EBA) launched today a public consultation to revise its Guidelines on internal governance. This review takes into account the amendments introduced by the fifth Capital Requirements Directive (CRD V) and the Investment Firms Directive (IFD) in relation to credit institutions’ sound and effective governance arrangements. The consultation runs until 31 October 2020.

The European Banking Authority (EBA) and the European Supervisory Market Authority (ESMA) launched today a public consultation on its revised joint Guidelines on the assessment of the suitability of members of the management body and key function holders. This review reflects the amendments introduced by the fifth Capital Requirements Directive (CRD V) and the Investment Firms Directive (IFD) in relation to the assessment of the suitability of members of the management body. The consultation runs until 31 October 2020.

The Board of Supervisors (BoS) of the European Banking Authority (EBA) agreed on the tentative timeline and sample of the 2021 EU-wide stress test. The exercise is expected to be launched at the end of January 2021 and its results to be published at the end of July 2021.

The European Banking Authority (EBA) published today its quarterly Risk Dashboard together with the results of the Risk Assessment Questionnaire (RAQ). The updated data shows that the impact of COVID-19 was mainly reflected in a contraction of banks’ capital ratios and profitability, the cost of risk increased, whereas non-performing loans (NPL) ratios remained stable, confirming that the impact of the pandemic on asset quality can be delayed. The EBA also published a thematic note on leveraged finance, which highlights that the expansion of this market segment in recent years has come along with a significant easing of credit standards.

• The EBA reminds financial institutions that the transition period between the EU and UK will expire on 31 December 2020, which will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis (passporting).• Financial institutions wishing to operate in the EU and offer services to their EU customers should ensure they have obtained the necessary authorisations and effectively establish themselves before the end of the transition period.• Financial institutions affected by the UK withdrawal from the EU, should provide adequate information to their EU customers regarding the availability of services after the end of the transition period.

The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) specifying the methods to avoid that instruments indirectly subscribed by the resolution entity for the purpose of meeting the minimum requirement for own funds and eligible liabilities (MREL), applicable to entities that are not themselves resolution entities, hamper the smooth implementation of the resolution strategy. These patterns of indirect subscription are also known as “daisy chains of internal MREL”. The consultation runs until 23 October 2020.

The European Banking Authority (EBA) launched today a public consultation on its draft Implementing Technical Standards (ITS) specifying uniform reporting templates, instructions and methodology for the identification and transmission, by resolution authorities to the EBA, of information on minimum requirements for own funds and eligible liabilities (MREL). This reporting between resolution authorities and the EBA aims to ensure that the EBA has all the necessary information to understand how MREL is set within member states. The consultation runs until 24 October 2020.

The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) specifying the methodology to be used by resolution authorities to estimate the Pillar 2 (P2R) and combined buffer requirements (CBR) at resolution group level for the purpose of setting the minimum requirement for own funds and eligible liabilities requirement (MREL) under the Bank Recovery and Resolution Directive (BRRD).The estimation of P2R and CBR is necessary for setting MREL when the resolution group perimeter differs significantly from the prudential perimeter at the level of which own fund requirements have been set by the competent authority. The consultation runs until 24 October 2020.

The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) and draft Implementing Technical Standards (ITS) on the impracticability of contractual recognition of write-down and conversion powers and related notifications as laid down in the Bank Recovery and Resolution Directive (BRRD). These standards aim at promoting the effective application of resolution powers to banks and banking groups and to foster convergence of practices between relevant authorities and institutions across the EU. The consultation runs until 24 October 2020.

Following the publication of its statement on additional supervisory measures in relation to the COVID-19 pandemic, the European Banking Authority (EBA) published today Guidelines that make available to competent authorities a special procedure for the supervisory review and evaluation process (SREP) for the year 2020.  The new Guidelines identify how flexibility and pragmatism could be exercised in relation to the SREP framework in the context of this pandemic.

The European Banking Authority (EBA) launched today a consultation on draft regulatory technical standards (RTS) specifying how institutions should determine exposures arising from derivative and credit derivative contracts not entered directly into with a client but whose underlying debt or equity instrument was issued by a client. These draft RTS will ensure appropriate levels of consistency through different pieces of the regulatory framework for the calculation of exposures for large exposure purposes. The consultation runs until 23 October 2020.

The European Banking Authority (EBA) published today its Report on benchmarking of remuneration practices in EU banks for the financial years 2017 and 2018 and high earners data for 2018. The data shows that in 2018, the number of high earners in EU banks receiving a remuneration of more than EUR 1 million increased slightly by 1.58%, from 4 861 in 2017 to 4 938 in 2018. Over a longer period of time, the number of high earners increased significantly (+44.09%), from 3 427 in 2010 to 4 938 in 2018. The average ratio of variable to fixed remuneration for all high earners in the EU/EEA increased over time from 127% in 2014 to 139% in 2018. The observed remuneration levels of high earners reached up to EUR 39 million.

As part of its drive for more proportionate regulatory and supervisory framework, the European Banking Authority (EBA) is looking for ways to optimise supervisory reporting requirements and reduce reporting costs for institutions, especially smaller ones. To fulfil this mandate the EBA launched a questionnaire addressed to all European banks and a call for case studies to collect evidence on reporting costs as well as industry views on ways to reduce such costs and make the supervisory reporting more efficient. The EBA expects the responses to the questionnaires and case studies in October 2020.

The European Banking Authority (EBA) launched today a consultation detailing on the three conditions institutions should comply with when they decide to make use of the alternative treatment with regard to tri-party repurchase agreements facilitated by a tri-party agent. The consultation runs until 22 October 2020.

The European Banking Authority (EBA) launched a consultation on draft Regulatory Technical Standards (RTS) on default probabilities (PDs) and losses given default (LGDs) for default risk model for institutions using the new Internal Model Approach (IMA) under the Fundamental Review of the Trading Book (FRTB). These draft RTS are part of the deliverables included in the roadmap for the new market and counterparty credit risk approaches published on 27 June 2019. The consultation runs until 22 October 2020.

The European Banking Authority (EBA) published today a list of the public guarantee schemes issued in response to the COVID-19 pandemic. This publication, which complements the information included in the EBA Report on the implementation of selected COVID-19 policies, aims at providing transparency to the public on the existence of public guarantees, as well as responding to the European Commission’s request for a stock-take of such guarantees.

The European Supervisory Authorities (ESAs) have informed the European Commission of the outcome of the review conducted by the ESAs of the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs). This follows the ESAs’ consultation paper published on 16 October 2019 on draft regulatory technical standards (RTS) to amend the technical rules on the presentation, content, review and revision of KID (Delegated Regulation (EU) 2017/653).