Domestic

CBI updates PSD2 FAQs

On 14 August 2025, the Central Bank of Ireland (CBI) updated the PSD2 FAQs, removing the notification requirement in respect of the Limited Network Exemption (LNE). The FAQs no longer require firms availing of this exemption to notify the CBI on an annual basis to confirm that they continue to meet the exemption.

European

The EBA publishes statement confirming its response to the new European Commission’s Delegated Act postponing the market risk framework in the EU

On 12 June 2025, the European Commission adopted a new Delegated Act in accordance with Article 461a of Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR), deferring the application of the Fundamental Review of the Trading Book (FRTB) standards for calculating own funds requirements for market risk in the European Union for another year to 1 January 2027. Provided that the co-legislators do not object to the Commission’s proposal, on 8 August 2025 the EBA confirmed that in its no action letter published on 12 August 2024 would remain fully valid and in place. In addition, the EBA’s considerations on specific issues arising from the FRTB postponement would also remain valid and applicable during the extended postponement period. Specifically:

• Market risk contribution to the output floor (S-TREA): institutions that use at least one type of internal models should continue to determine own funds requirements for floor purposes based on either the FRTB-SA or CRR2-SA, depending on whether they are subject to the FRTB reporting in accordance with Article 430b CRR, or not.
• Structural foreign exchange positions: permissions under Article 352(2) CRR based on the current EBA Guidelines (EBA/GL/2020/09) remain valid. These can be considered compliant with Article 104c of the CRR until the regulatory technical standard (RTS) on structural FX enter into force and the no-action letter ceases to apply.
• Threshold calculation using ‘main risk driver’ approach: institutions may use the CRR3 'main risk driver' approach to calculate thresholds under Article 325a CRR during the postponement period.
• Recognition of CVA hedges: instruments recognised as eligible CVA hedges under CRR3 should be excluded from the scope of own funds requirements for market risk. No authorisation or notification is needed under the RTS on changes to internal models.
• Disclosures and reporting: Institutions should follow disclosure and reporting frameworks on market risks as set out in Regulation (EU) 2024/3172 (disclosures) and Regulation (EU) 2024/3117 (reporting) that already reflect the first postponement, as well as the comply with the reporting requirements of Regulation (EU) 2021/453 (reporting), where applicable. The EBA will trigger the necessary formal updates to the former two ITS to reflect the new FRTB application date.
• Operational risk boundary alignment: institutions should apply the same prudential boundary to determine both market risk and the financial component of the operational risk indicator, consistent with the no-action letter.

EBA published its first quarter 2025 supervisory data which shows that the EU/EEA banking sector remains robust, despite increased cost of risk

On 11 August 2025, the EBA published its Q1 2025 Risk Dashboard (RDB), which discloses aggregated statistical information for the largest EU/EEA credit institutions. Some examples of the statistics include:

• The common equity tier 1 ratio for EU/EEA banks was reported at 16.2%, remaining stable compared to the previous quarter.
• EU/EEA banks reported total assets of EUR 29 trillion, representing a 2.7% increase from the previous quarter. This change was mainly due to a rise in debt securities, which made up 14.6% of total assets compared to 13.7% in Q4 2024.
• EU/EEA banks reported non-performing loans totalling EUR 377.8 billion, consistent with the prior quarter's figures. 
• EU/EEA banks recorded a return on equity of 10.5% in the first quarter of 2025, which was 10 basis points lower than the same period in 2024.
• The liquidity coverage ratio and net stable funding ratio both declined in the first quarter, reaching 159.5% (down from 163.4% in Q4) and 126.9% (compared to 127.2% in Q4), respectively.

The EBA amends technical standards specifying the data collection for the 2026 benchmarking exercise

On 8 August 2025, the EBA published its final draft implementing technical standards (ITS), amending the Implementing Regulation on the benchmarking of credit and market risk for the 2026 exercise. The most significant change is in the area of market risk, where the EBA is proposing to restrict the data collection to the information on the alternative standardised approach (ASA) to be provided by those banks that were granted the internal model approval. In the area of credit risk, the EBA is suggesting only minor changes.

EBA consults on amendments to RTS on resolution plans, resolvability assessments and resolution colleges

On 8 August, the EBA launched a consultation to amend the existing RTS on resolution plans and resolvability assessments and the existing RTS on resolution colleges, which are combined under Commission Delegated Regulation (EU) 2016/1075. These RTS' are mandated under Articles 15, 16 and 88 of Directive 2014/59/EU (Bank Recovery and Resolution Directive (BRRD)).

The deadline for submitting responses is 5 November 2025.

EBA consults on revisions to its guidelines on internal governance

On 7 August 2025, the EBA launched a consultation on revisions to its existing guidelines on internal governance (revised guidelines) that were issued in accordance with Article 74(3) of Directive (EU) 2013/36 (CRD IV).

The revised guidelines seek:

• to further harmonise institutions’ internal governance arrangements, process and mechanisms to align with the requirements of CRD IV, the revised guidelines further specify the requirements under Article 88(3) of CRD IV to ensure that each member of management body, senior manager and key function holder have a documented statement of ole and duties and that a mapping of duties of the members of the management body, senior managers and key function holders is documented
• provide guidance on third-country branches’ internal governance arrangements, processes and mechanisms
• reflect the results published in the EBA benchmarking report of diversity practices and gender-neutral remuneration policies
• to ensure institutions take account of the requirements set out by the EBA guidelines on the management of ESG risks
• to take account of and align with the entry into force of DORA

The deadline for submitting responses is 7 November 2025.

EBA publishes final draft RTS on allocation off-balance sheet items and conversion factors

On 18 August 2025, the EBA published its final report on draft RTS on the allocation of off-balance sheet items and the specification of factors that might constrain institutions’ ability to cancel unconditionally cancellable commitments under Article 111(8) of the CRR.

Under the standardised approach of credit risk, the exposure values of off-balance exposure depend on the application of certain percentages, which in turn rely on a bucket classification. With these draft RTS the EBA introduced assignment criteria for off-balance sheet items not already assigned to any buckets in line with the Annex I of CRR. These assignment criteria aim to distinguish between different levels of conversion probability, leveraging on the existence of financial covenants, conditions related to non-credit related events and the optionality the obligor has in drawing or not the off-balance sheet item.

In addition, draft RTS propose:

• a non-exhaustive list of examples to support institutions in classifying their off-balance sheet items
• four factors to be considered as constraining institutions’ ability to cancel an unconditionally cancellable commitment that relate to risk management processes, commercial considerations, as well as to litigation and reputational risks
• a notification process for off-balance sheet items not already included in Annex I via the COREP framework

EBA publishes final draft RTS on operational risk losses

On 4 August 2025, the EBA published a final report setting out three sets of final draft RTS relating to operational risk losses for the purposes of the revised prudential framework under CRR (as revised by CRR 3).  

The final draft RTS that have been published are as follows:

• draft RTS establishing a risk taxonomy on operational risk, including a list of operational risk event types, categories and attributes that institutions must use when recording operational risk loss events in line with the CRR framework and international standards (Article 317(9) of CRR)
• draft RTS on the conditions under which it would be ‘unduly burdensome’ for an institution to calculate the annual operational risk loss under Article 316(3) of CRR
• draft RTS specifying how institutions must determine the adjustments to their loss data set following the inclusion of losses from merged or acquired entities or activities as referred to in Article 321(2) of CRR

The final draft RTS’ are subject to endorsement by the European Commission and scrutiny by the European Parliament and Council of the EU, before publication in the Official Journal of the EU.

2025 EBA EU-wide and ECB stress test results

On 1 August 2025, the EBA published the outcome for banks that participated in the 2025 EBA EU-wide stress test. In addition, the European Central Bank (ECB) has also published high level information on the outcome of the parallel single supervisory mechanism (SSM) stress test of banks directly supervised by the ECB but which were not included in EBA EU-wide stress test.

A number of Irish banks were subject to the EBA EU-wide stress test exercise.

The stress test is not a pass or fail exercise and no threshold is set to define the failure or success of banks for the purpose of the exercise. Instead, the findings of the stress test will inform the 2025 supervisory review and evaluation process for banks, which is conducted by joint supervisory teams made up of staff at the European Central Bank and the Central Bank of Ireland.

SRB consults on updated operational guidance on separability and transferability for transfer tools

On 13 August 2025, the Single Resolution Board (SRB) has launched a consultation on revisions to its operational guidance on separability and transferability for transfer tools. The SRB's proposal for the updated operational guidance can be accessed here. The SRB has proposed the revisions to the operational guidance following the release of its ‘SRM Vision 2028’, which emphasises a transition from resolution planning to a focus on operationalisation, resolution testing and crisis readiness.

Opinion of the ECB on the portability of IBAN numbers for bank accounts

On 19 August 2025, the ECB published an opinion on the portability of IBAN numbers for bank accounts, CON/2025/24, in response from Committee on the Economy, Consumer Protection and Digitalisation of the Belgian Chamber of Representatives in respect of a draft law amending the Belgian Code of Economic Law to introduce a system for the portability of IBAN numbers for bank accounts (the draft law). The specific observations included:

• The draft law merely lays down the principle of IBAN portability and provides that the arrangements for the portability are to be determined by a royal decree adopted by the Council of Ministers, the ECB to be consulted on any such royal decree.
• The national portability solution retained should remain consistent with the Union legal framework. In particular, considering the articulation between Union law and the ISO standards defining the current format of the IBAN, the portable payment account number should continue to be compliant with the format defined in accordance with the ISO standards in order to be recognised as an IBAN.

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

Date published: 30 September 2025

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.