Domestic

Deputy Governor of the CBI Mary-Elizabeth McMunn speech at the Institute of Bankers

On 3 April 2025, Mary-Elizabeth McMunn delivered her first speech in her new role as Deputy Governor of the Central Bank of Ireland (CBI), setting out her perspectives on the role of regulation and supervision in ensuring best interests of consumers and the wider economy. Deputy Governor McMunn explained that the CBI have moved to a more integrated approach to supervision in recognition of these factors to ensure effective and efficient delivery of supervisory priorities. She described that regulatory simplification is an agenda that is welcome by the CBI, emphasising the need for up to date and proportionate regulatory frameworks that meet their intended outcomes. The key takeaway was that the public has the right to expect the delivery of stability, resilience and protection.

Fitness and Probity updates

On 10 April 2025, the CBI issued a number of documents as part of the proposed changes to the Fitness and Probity (F&P) Regime. These include:

F&P gatekeeper process

It sets out the key steps of the assessment process as well as guidance for stakeholders, serving as practical guidance for regulated entities and proposed appointees.

Revised guidance on the Standards of F&P

The CBI published updated guidance on the Standards of F&P, which consolidates and replaces the existing guidance on F&P Regulations and F&P Standards. The new guidance also incorporates the intersection of other CBI requirements, such as the Corporate Governance Requirements and Individual Accountability Framework with the F&P Regime, bringing clarity to a number of areas:

• use of objective measures within the assessment process
• the number of directorships that can be held by an individual
• time commitments expected of individuals
• the roles of executive, non-executive, and independent non-executive directors
• the identification, management and mitigation of conflicts of interest
• CBI expectations regarding collective suitability and diversity within management boards
• approach to past events in the context of pre-approval controlled function applications

Fitness and Probity Review - Report on Implementation of Recommendations

The Report on the Implementation of Recommendations (the report) outlines the progress on the implementation of the recommendations by the F&P Gatekeeping Review conducted in 2024. It identifies (1) clarity of supervisory expectations (2) internal governance and (3) fairness, efficiency and transparency, as areas of significant focus since the review.

The CBI propose to update and consolidate the draft guidance into a single document to make the standards more user friendly. The report also notes that a new F&P unit has been established to address the gaps, such as the need for enhanced seniority and independence in final decision-making stages. This unit will take ownership of gatekeeping assessment work, approval of applications, and adherence to established process and progression of decisions.

CP160 - Consultation Paper on Amendments to the Fitness and Probity Regime

The CBI published a Consultation Paper (CP160), following the recommendations arising from the 2024 F&P Gatekeeping Review. CP160 addresses recommendations for increased clarity and transparency in relation to the F&P standards and also reviews the list of prescribed pre-approval controlled functions. The CBI welcomes responses to the proposals from stakeholders to CP160@centralbank.ie before the deadline of 10 July 2025.

European

‘Enhancing cross-border payments in Europe and beyond’ speech by Piero Cipollone, member of the Executive Board of the ECB, at the Regional Governors’ meeting

On 1 April 2025, Piero Cipollone, Member of the Executive Board of the European Banking Authority (EBA), delivered a speech at the Regional Governors’ Meeting on ‘Enhancing cross-border payments in Europe and beyond’. Cipollone focused on the need to enhance cross-border payments as a matter of global urgency. The key takeaways were:

1. The current state of cross-border retail payments: Although cross-border payment flows are expected to double to €268tn by 2030, international payments often are inefficient and expensive compared to domestic payments. The inefficiencies with the system undermine economic integration and growth, place a disproportionate share of the costs on the world’s most vulnerable groups, and causes a vacuum that other players are seeking to fill, alongside the challenges that come with the United States’ global pushing of stablecoins.
2. Geopolitical fragmentation: International order has fundamentally changed and so has the potential for fragmentation of payment systems worldwide. For the euro to preserve stability, it needs to deliver the benefits of a global public good, such as reliability in delivering tangible benefits while respecting the values of integrity, sovereignty and stability.
3. The Eurosystem’s strategic response to these challenges: The ECB’s strategy to address these challenges rests on two key initiatives: interlinking fast payment systems and enhancing cross-border retail payments through the creation of a digital euro and its use internationally.

EBA publishes annual assessment of banks’ internal approaches for the calculation of capital requirements

On 4 April 2025, the EBA published its 2024 reports on annual market and credit risk benchmarking exercises, as well as a report on the fundamental review of the trading book alternative standardised approach.

The Market Risk Benchmarking IMA Report provides a summary on the conclusions drawn from a hypothetical portfolio activity which was performed on a sample of 43 European banks from 13 jurisdictions in 2023/2024. The results outline that:

• most participating banks have seen a low dispersion in the initial market valuations
• variability has generally declined
• overall variability for value at risk is lower than the observed variability for stressed value at risk

The credit risk exercise results outline:

• the relative share of the exposure at default subject to the internal ratings based method slightly decreased in the medium run
• the share of approved material model changes has increased for all asset classes
• clear decreasing trend of variability

EBA publishes peer review on the performance of stress tests by deposit guarantee schemes

On 7 April 2025, the EBA published the latest findings of its peer review on the performance of stress tests by deposit guarantee schemes (DGSs) across the EU. The review compared the performance of stress tests by seven national DGSs against benchmarks derived from the Deposit Guarantee Schemes Directive and the revised EBA guidelines on stress tests of deposit guarantee schemes. The EBA aims to improve the DGS abilities in handling bank failures and safeguard depositors’ funds through these assessments. The review found that although there were only minor shortcomings in the development of all DGSs overall, only five of the seven could demonstrate:

• performance of the mandatory core stress test, using realistic assumptions and conducting objective evaluations
• increased severity and complexity of testing scenarios 
• identified areas for improvements in systems with planned actions

Follow up measures are outlined in the report for all EU DGSs relating to development, performance, severity and complexity of stress tests as well as areas for improvement. A follow-up peer review of the implementation of these measures will be carried out by the EBA in two years.

Sharon Donnery keynote speech at the Delphi Economic Forum X

On 10 April 2025, Sharon Donnery, Member of the Supervisory Economic Board of the European Central Bank (ECB), delivered a keynote speech at the Delphi Economic Forum X, providing an overview on the challenges of the current risk landscape and how these are being addressed.

Ms. Donnery addressed the resilience of the European banking sector in recent years, noting that strong capital and liquidity positions were maintained by supervised banks despite a challenging macro-financial landscape. While this resilience allowed for shock absorption when confronted with significant global disruptions, fiscal measures and monetary policy also contributed to the mitigation of these shocks. Ms. Donnery emphasised and considered the importance of underlying risk drivers, touching on geopolitical, cyber and market risks as emerging areas of critical risk.

The key takeaway was the need to focus on harmonisation of European rules to reduce complexity. Despite the resilience of the European banking sector in recent years, Ms. Donnery advised that we must remain vigilant amid the evolving uncertainty, stressing the criticality of consistency and soundness in international banking for financial stability and cross-border competition.

Public hearing on EBA’S proposed response to EC’S call for advice on AMLA

On 10 April 2025, the EBA held a public hearing to discuss the proposed response to the European Commission (EC) call for advice (CFA) on four anti-money laundering (AML) mandates in preparation for the transition to the new AML/CFT framework. The CFA was issued to the EBA in March 2024 on certain draft regulatory technical standards including mandates on:

• risk assessment for the selection of direct supervision mandated by Article 12(7) of the Anti-Money Laundering Authority Regulation ((EU) 2024/1620) (AMLAR)
• the methodology for assessment of inherent and residual risk profile of obliged entities mandated by Article 40(2) of Anti-Money Laundering Directive ((EU) 2024/1620) (AMLD6)
• customer due diligence mandated by Article 28(1) of the Anti-Money Laundering Regulation ((EU) 2024/1624) (AMLR)
• pecuniary sanctions, administrative measures and periodic penalty payments.

The EBA was also requested to consider guidance on the base amounts for pecuniary sanctions under Article 53(11) of the AMLD6, and minimum requirements for group-wide policies under Article 16(4) of the AMLR.

The public consultation will remain open until 06 June 2025. Analysis of the responses will then take place, with a deadline of October 2025 for the submission of the final response to the CFA.

EBA Methodological Guide - Indicators for Risk Assessment and Resolution & Detailed Risk Analysis Tools

On 16 April 2025, the EBA updated the list of EBA risk indicators to the Methodological Guide on Indicators for Risk Assessment and Resolution & Detailed Risk Analysis Tools. The updated guidance is based on the EBA reporting framework version 4.0 and sets out how indicators are calculated, allowing figures to be interpreted consistently.

For more information on these topics please contact any member of A&L Goodbody's Financial Regulation Advisory team.

This publication provides an overview of certain legal and regulatory developments that may be of interest to certain entities. It does not purport to provide analysis of law or legal advice and is strictly for information purposes only.