Consultation on Implementing Technical Standards on NPL transaction data templates

  • The EBA is proposing information standardisation to increase efficiencies of the secondary markets for sales of non-performing loans and reduce entry barriers for smaller banks and smaller investors.
  • The proposed NPL transaction templates are built on previous voluntary templates and consider the experience of market participants from the sell and buy side.
  • The NPL transaction templates are the linchpin for numerous initiatives under the December 2020 European Commission’s action plan for NPL in the aftermath of the COVID-19 pandemic.

The European Banking Authority (EBA) today launched today a public consultation on the draft Implementing Technical Standards (ITS) specifying the requirements for the information that sellers of non-performing loans (NPL) shall provide to prospective buyers, seeking to improve the functioning of NPL secondary markets. The objective of the draft ITS is to provide a common standard for the NPL transactions across the EU enabling cross-country comparison and thus reducing information asymmetries between the sellers and buyers of NPL.

Common templates, including data fields with their definitions and characteristics set out in the draft ITS would facilitate the sales of NPL on secondary markets, increase efficiency of those markets and reduce entry barriers for small credit institutions and smaller investors wishing to conclude transactions.

The draft ITS are built around the templates to be used for the provision of loan-by-loan information regarding counterparties related to NPL, contractual characteristics of the loan itself, any collateral and guarantee provided with the associated enforcement procedures and the historical collection and repayment schedule of the loan. The NPL transaction templates are also complemented by a data glossary and the instructions for filling in the templates.

The draft ITS also take into account the proportionality principle by setting different information requirements depending on the size of NPL, specifying the mandatory and non-mandatory data fields, and considering a different scope of application of the data fields in relation to the nature of the borrower (private individual or corporate),  and that of the loan (secured or not).

The EBA has developed the draft ITS leveraging on the experience gained with the voluntary use of the NPL data templates, which it had developed in 2017 and reflecting the industry feedback on the use of these templates and wider market practices. The EBA collected these experiences  while developing the discussion paper that was published in May 2021.

Consultation process and next steps

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 31 August 2022. All received contributions will be published at the end of the consultation, unless requested otherwise.

A public hearing on the draft ITS will take place via online meeting on Wednesday 15 June 2022 from 10:00 to 12:00 CET. Please register for the hearing here by 13 June 2022 16:00 CET.

Following the consultation period, the draft ITS will be finalised and submitted to the European Commission by the end of 2022.

Background

Article 16(1) of the Directive on credit servicers and credit purchasers (Directive (EU) 2021/2167)  mandates the EBA to develop draft ITS to specify the templates to be used by credit institutions for the provision of information to credit purchasers when selling or transferring non-performing loans (NPL) for the purposes of financial due diligence and valuation of NPLs.

 

ESAs consultation on STS securitisations-related sustainability disclosures

Today the European Supervisory Authorities (EBA, EIOPA and ESMA) published a Consultation Paper seeking input on draft Regulatory Technical Standards (RTS) on the content, methodologies and presentation of information in respect of the sustainability indicators for Simple, Transparent and Standardised (STS) securitisations.

The proposed draft RTS aim to:

  • facilitate disclosure by the originators of the principal adverse impacts of assets financed by STS securitisations on environmental, social and governance-related factors;
  • supplement the single rulebook under the Securitisation Regulation as amended by the Capital Markets Recovery Package (CMRP);
  • draw upon the ESAs’ work in respect of sustainability-related disclosures in the financial services under the Sustainable Finance Disclosure Regulation (SFRD).

Consultation process and next steps

The closing date for responses to the consultation is 2 July 2022.

All contributions should be submitted online at www.esma.europa.eu under the heading ‘Your input - Consultations’. Respondents are invited to use the “response form”.

Following the consultation period, the draft RTS will be finalised and submitted to the European Commission.

Consultation on draft Guidelines on the high earner data collection exercises under CRD and IFD

The European Banking Authority (EBA) launched today a consultation on updates to its Guidelines on the data collection exercise on high earners, which were originally published in 2012 and revised in 2014. The review of the data collection exercises reflect the amended remuneration framework laid down in the Capital Requirements Directive (CRDV), including the introduction of derogations to pay out a part of the variable remuneration in instruments and under deferral arrangements. In addition, the need to update these Guidelines stems from the specific remuneration regime that has been introduced for investment firms and is laid down in the Investment Firms Directive (IFD) and Investment Firms Regulation (IFR). The consultation runs until 21 March 2022.

The CRD and the IFD require competent authorities to collect information on the number of natural persons, per institution and investment firm respectively, who are remunerated EUR 1 million or more per financial year, in pay brackets of EUR 1 million. The information should also include details on their job responsibilities, the business area and the main elements of the salary, bonus, long-term award, and pension contribution.

The new reporting format included in the revised Guidelines will be used for the annual collection of data regarding high earners, starting for the financial year that ends in 2022. For the financial year 2021 the high earners data collection exercise will be conducted under the existing Guidelines for both institutions and investment firms, unless the latter are small and non-interconnected.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 21 March 2022. All received contributions will be published at the end of the consultation, unless requested otherwise.

public hearing on the draft Guidelines on the data collection exercise on high earners as well as on the draft Guidelines on the remuneration and gender pay benchmarking exercises (which are being consulted on in parallel) will take place via conference call on 17 February 2022 from 14:00 to 15:30 CET.

Legal basis and next steps

The EBA has drafted these Guidelines in accordance with Article 75 (3) of Directive 2013/36/EU and Article 34(4) of Directive (EU) 2019/2019 that provide specific mandates to the EBA to issue Guidelines for the collection of data of high earners.

The new reporting format will apply for the collection of data in 2023 for the financial year 2022.

Consultation on draft Guidelines on the remuneration and gender pay gap benchmarking exercises under IFD

The European Banking Authority (EBA) launched today a consultation to update its Guidelines on the remuneration benchmarking exercise under the Capital Requirements Directive (CRD), which was originally published in 2012 and updated in 2014. The review integrates additional requirements introduced by CRD V regarding the application of derogations to the requirement to pay out a part of variable remuneration in instruments and under deferral arrangements and the benchmarking of the gender pay gap. In addition, the review also includes guidance on how to harmonise the benchmarking of approvals granted by shareholders to use higher ratios than 100% between the variable and fixed remuneration. A separate and specific set of Guidelines is provided for investment firms under Investment Firms Directive (IFD). The consultation runs until 21 March 2022.

The additional revisions to the Guidelines for institutions and the new Guidelines for investment firms reflect the changes made to remuneration and disclosure requirements as well as the new remuneration framework for investment firms. The approach taken in the draft Guidelines for investment firms is consistent with the corresponding Guidelines for banks.

The templates for the data collection have been revised, taking also into account the European Commission’s Implementing Regulation on disclosures. Additional information is collected on the application of the derogations to the application of the requirements to pay out parts of the variable remuneration in instruments and under deferral arrangements.

The principle of equal pay for equal work or work of equal value and measures to ensure equal opportunities have already been included in the EBA Guidelines on sound remuneration policies and internal governance. The benchmarking of the gender pay gap will allow competent authorities to monitor the implementation of such measures and their development at different levels of pay. The Guidelines aim at ensuring that the benchmarking of the gender pay gap covers a representative sample of institutions. Specific templates for the benchmarking of the gender pay gap have also been introduced.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 21 March 2022. All received contributions will be published at the end of the consultation, unless requested otherwise.

public hearing on the draft Guidelines on the remuneration and gender pay benchmarking exercises as well as on the draft Guidelines on the data collection exercise on high earners (which are being consulted on in parallel) will take place via conference call on 17 February 2022 from 14:00 to 15:30 CET.

Legal basis and next steps

These Guidelines have been drafted in accordance with Articles 75(1) and 94(1) of Directive 213/36/EU and Article 34 (1) of Directive (EU) 2019/2034, which mandate the EBA to benchmark remuneration trends and practices and the gender pay gap and to publish information on approved higher ratios between the variable and fixed remuneration within banks on an aggregate basis for each Member State.

The new reporting format is expected to apply for the collection of data in 2023 for the financial year 2022. For the gender pay gap, the first data collection will concern the reference year 2023.

Consultation on draft Guidelines on the remuneration, gender pay gap and approved higher ratio benchmarking exercises under CRD

The European Banking Authority (EBA) launched today a consultation to update its Guidelines on the remuneration benchmarking exercise under the Capital Requirements Directive (CRD), which was originally published in 2012 and updated in 2014. The review integrates additional requirements introduced by CRD V regarding the application of derogations to the requirement to pay out a part of variable remuneration in instruments and under deferral arrangements and the benchmarking of the gender pay gap. In addition, the review also includes guidance on how to harmonise the benchmarking of approvals granted by shareholders to use higher ratios than 100% between the variable and fixed remuneration. A separate and specific set of Guidelines is provided for investment firms under Investment Firms Directive (IFD). The consultation runs until 21 March 2022.

The additional revisions to the Guidelines for institutions and the new Guidelines for investment firms reflect the changes made to remuneration and disclosure requirements as well as the new remuneration framework for investment firms. The approach taken in the draft Guidelines for investment firms is consistent with the corresponding Guidelines for banks.

The templates for the data collection have been revised, taking also into account the European Commission’s Implementing Regulation on disclosures. Additional information is collected on the application of the derogations to the application of the requirements to pay out parts of the variable remuneration in instruments and under deferral arrangements.

The principle of equal pay for equal work or work of equal value and measures to ensure equal opportunities have already been included in the EBA Guidelines on sound remuneration policies and internal governance. The benchmarking of the gender pay gap will allow competent authorities to monitor the implementation of such measures and their development at different levels of pay. The Guidelines aim at ensuring that the benchmarking of the gender pay gap covers a representative sample of institutions. Specific templates for the benchmarking of the gender pay gap have also been introduced.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 21 March 2022. All received contributions will be published at the end of the consultation, unless requested otherwise.

public hearing on the draft Guidelines on the remuneration and gender pay benchmarking exercises as well as on the draft Guidelines on the data collection exercise on high earners (which are being consulted on in parallel) will take place via conference call on 17 February 2022 from 14:00 to 15:30 CET.

Legal basis and next steps

These Guidelines have been drafted in accordance with Articles 75(1) and 94(1) of Directive 213/36/EU and Article 34 (1) of Directive (EU) 2019/2034, which mandate the EBA to benchmark remuneration trends and practices and the gender pay gap and to publish information on approved higher ratios between the variable and fixed remuneration within banks on an aggregate basis for each Member State.

The new reporting format is expected to apply for the collection of data in 2023 for the financial year 2022. For the gender pay gap, the first data collection will concern the reference year 2023.

Consultation on draft RTS on performance-related triggers in STS on-balance -sheet securitisations

The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) specifying and, where relevant, calibrating the minimum performance-related triggers for simple, transparent and standardised (STS) on-balance-sheet securitisations that feature non-sequential amortisation.  The Capital Markets Recovery Package amended the Securitisation Regulation in several aspects, including creating a specific framework for STS on-balance-sheet securitisation to ensure that the Union securitisation framework provides for an additional tool to foster economic recovery in the aftermath of the COVID-19 crisis. These draft technical standards aim at providing technical clarification on these triggers. The consultation runs until 28 February 2022.

With the purpose of standardisation, the amended Securitisation Regulation sets out that sequential amortisation shall be applied to all tranches of STS on-balance-sheet securitisations. However, as a derogation, STS on-balance-sheet securitisation might feature non-sequential amortisation to avoid disproportionate costs of protection, as long as some minimum performance-related triggers determine the application of sequential amortisation. This will ensure that tranches providing credit protection have not already been amortised when significant losses occur at the end of the transaction.

The draft RTS further specify the minimum backwards- and forward-looking triggers, and set out that, for two of them, their level should be determined by the parties involved in securitisation transactions, as they are transaction specific and depend on the assessment made by the parties of the riskiness of the underlying exposures at inception. However, the RTS establish a level for the additional backwards-looking trigger to ensure for all STS on-balance-sheet securitisations featuring a non-sequential amortisation that under no circumstances the credit enhancement of the retained senior tranche falls below a certain threshold, in comparison with that at origination, as a result of the amortisation of the protected tranches.

Consultation process

Responses to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 28 February 2022.

A public hearing will take place via conference call on 26 January 2022 from 10:00 to 11:30 CET. 

Legal basis and background

The draft regulatory technical standards have been developed in accordance with Article 26c(5) of Regulation (EU) 2017/2402 (the Securitisation Regulation) as amended by the Regulation (EU) 2021/557 of 31 March 2021  (as part of the Capital Markets Recovery Package), which requests the EBA to develop regulatory technical standards i) to specify the minimum performance-related triggers for simple, transparent and standardised on-balance-sheet securitisations; and (ii) “where relevant”, to calibrate them.

Consultation on ITS amending Implementing Regulation (EU) 2016/1801 on the mapping of ECAIs’ credit assessments for securitisation

The European Banking Authority (EBA) launched today a public consultation to amend the Implementing Regulation on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for securitisation. The changes reflect the relevant amendments introduced by the new Securitisation Framework, as well as the mappings for two ECAIs that extended their credit assessments to cover securitisations. The Implementing Regulation is part of the EU Single Rulebook for banking aimed at creating a safe and sound regulatory framework consistently applicable across the European Union (EU). The consultation runs until 31 January 2022.

The Implementing Regulation developed by the EBA and adopted by the European Commission on 11 October 2016, aims at ensuring that credit assessments issued by ECAIs can be used for calculating capital requirements for securitisation positions. To this aim, the EBA specifies the correspondence or ‘mapping' between credit ratings and the credit quality steps (CQS) defined in Chapter 5 of the Capital Requirements Regulation (CRR).

The CRR amendments brought by the new Securitisation Framework have made it neccessary to update the mapping tables accordingly. Following the amendments to Chapter 5 of the CRR, a hierarchy of approaches was set out to calculate capital requirements for positions in a securitisation, whereby institutions using the Securitisation External Ratings Based Approach (SEC-ERBA) shall calculate risk-weighted exposure amounts based on CQSs set out in the CRR. The amended Regulation reflects 18 CQSs for long-term external credit assessments, which ensures enhanced granularity and risk sensitivity with respect to the approaches previously considered in the Regulation. 

In addition, since the adoption of the Implementing Regulation, one additional ECAI has been established in the EU with methodologies and processes in place for producing credit assessments for securitisation instruments, two existing ECAIs have extended their credit assessments to cover securitisations, and ESMA has withdrawn the registration of an ECAI. These changes have been reflected in the mapping tables accordingly.

 The EBA also published individual draft mapping reports illustrating how the methodology was applied to produce the mappings. 

Consultation process

Comments to the Consultation Paper can be sent by clicking on the "send your comments" button on the EBA's consultation page. Please note that the deadline for the submission of comments is 31 January 2022.

All contributions received will be published following the close of the consultation, unless requested otherwise.

A public hearing on the draft ITS will be held via conference call on18 January 2022 at 14:00 CET. The registration link can be found here.

Legal basis

The proposed revised draft ITSs have been developed according to Article 270e of Regulation 575/2013 (CRR).

Consultation paper on ITS on amending Commission Implementing Regulation on benchmarking of internal models

The European Banking Authority (EBA) launched today a consultation on the amendment of the Implementing Regulation for the 2023 benchmarking of internal approaches used in credit risk and market risk. While new instruments have been included for the 2023 market risk exercise, the credit risk IRB and IFRS 9 templates have remained untouched. However, for the IRB relevant data collection, some clarifications in the instructions are proposed and some issues are discussed with a view to apply future amendments to the ITS. The consultation runs until 18 February 2022.

The EBA benchmarking exercise forms the basis for both supervisory assessment and horizontal analysis of internal models. It ensures a consistent monitoring of the impact of the several different supervisory and regulatory measures aiming at the harmonisation of the capital requirements in the EU. In this regard, this consultation paper provides an annual update to the information collected.

For credit risk there are no changes to the benchmark portfolios nor to the data fields to be reported for the benchmark portfolios. Minor clarifications are provided in the instructions in Annex IV on how to deal with changes in the definition of default (where this is relevant for a required data field). In addition, the consultation paper contains a more general question on the reporting of historical losses with a view on a potential update of the data requirements in a future update of the ITS. 

For market risk, to keep the exercise informative, the consultation paper is proposing to extend the data collection, so as to include new instruments and portfolios, in particular as regards the instruments and portfolios that have lately been applied by the industry in a similar exercise.

No changes have been made to the IFRS 9 templates.

Consultation process

Responses to the consultations can be sent to the EBA by clicking on the "send your comments" button on the consultation page. The deadline for the submission of comments is 18 February 2022.

All contributions received will be published after the consultation closes, unless requested otherwise.

A public hearing on this consultation will take place on 3 February 2022 from 11:00 to 13:00 CET.

Legal basis

These draft ITS have been developed in accordance with article 78 of the Capital Requirements Directive (CRD), which requires the EBA to specify the benchmarking portfolios, templates and definitions to be used as part of the annual benchmarking exercises. These are used by competent authorities to conduct an annual assessment of the quality of internal approaches used for the calculation of own funds requirements.

Consultation on draft RTS on the specific liquidity measurement for investment firms

The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) on specific liquidity measurement requirements for investment firms and draft Guidelines on liquidity requirements exemptions for small and non-interconnected investment firms. The draft RTS and draft Guidelines aim to ensure consistent supervisory practices with regards to the application of liquidity requirements for investment firms across all EU Member States. The consultations run until 10 March 2022.

The draft RTS on specific liquidity measurement set out liquidity risk elements that may raise major concern for investment firms and that competent authorities will be required to consider when setting specific liquidity requirements as a result of an investment firm’s supervisory review and evaluation process (SREP). The draft RTS specify that those elements shall be considered under normal and severe, but plausible, conditions. In addition, to ensure proportionality, competent authorities should assess only a smaller set of elements for small and non-interconnected investment firms.

The draft Guidelines set out the criteria that competent authorities should take into account when exempting small and non-interconnected investment firms from liquidity requirements set out in the Investment firms Regulation. These Guidelines specify that an exemption should be based on the assessment of the financial resource needed for an orderly wind-down of the investment firm.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 10 March 2022.

A public hearing will take place via conference call on 18 January 2022 from 12:30 to 13:30 CET.

All contributions received will be published following the end of the consultation, unless requested otherwise.

Legal basis

The draft RTS has been developed in accordance with Article 42(6) of the Directive (EU) 2019/2034, which mandates the Authority to specify how liquidity risk and elements of liquidity risk are to be measured for the purpose of specific liquidity requirements.

The draft Guidelines have been developed in accordance with Article 43(4) of the Regulation (EU) 2019/2033 which mandates the Authority to specify further the criteria which the competent authorities may take into account when exempting investment firms that meet the conditions for qualifying as small and non‐interconnected investment firms set out in Article 12(1) from the liquidity requirement.

Directive (EU) 2019/2034 (IFD) and the Regulation (EU) 2019/2033 (IFR) were published in the Official Journal on 5 December 2019 and represent the new prudential framework for investment firms authorised under the Markets in Financial Instruments Directive (MIFID).

Consultation on draft Guidelines on the use of remote customer onboarding solutions

The European Banking Authority (EBA) launched today a public consultation on its draft Guidelines on the use of remote customer onboarding solutions. These Guidelines set out a common understanding by competent authorities of the steps financial sector operators should take to ensure safe and effective remote customer onboarding practices in line with applicable anti-money laundering and countering the financing of terrorism (AML/CFT) legislation and the EU’s data protection framework. Once adopted, these Guidelines will apply to all financial sector operators that are within the scope of the Anti-money Laundering Directive (AMLD). This consultation runs until 10 March 2022.

 Financial Institutions have seen a growing demand for remote customer onboarding solutions. This trend was exacerbated by restrictions on movement caused by the COVID-19 pandemic. As a result, the EBA considers it important for competent authorities and financial sector operators to understand the capabilities of these new remote solutions to make the most of the opportunities they offer, and at the same time, to support their sound and responsible use, as well as to be aware of ML/TF risks arising from the use of such tools and taking steps to mitigate those risks effectively.

These draft Guidelines set common EU standards on the development and implementation of sound, risk-sensitive initial customer due diligence (CDD) policies and processes in the remote customer onboarding context. They set out the steps financial institutions should take when choosing remote customer onboarding tools and when assessing the adequacy and reliability of such tools, in order to comply effectively with their AML/CFT obligations.

Consultation process

Comments to the two consultations can be sent to the EBA by clicking on the "send your comments" button on the respective consultation pages. Please note that the deadline for the submission of comments is 10 March 2022.

A public hearing will take place via conference call on 24 February 2022 from 11:00 to 12:30.

All contributions received will be published following the end of the consultation, unless requested otherwise.

Legal basis and background

These Guidelines have been developed in response to the European Commission’s request in the context of its Digital Finance Strategy, published in 2020. They are also in line with the EBA’s legal mandate to lead, coordinate and monitor the EU financial sector’s fight against ML/TF.