Financial Services Regulation and Compliance - Banking Sept 2019
DOMESTIC
Identity verification simplified in credit reporting
The Credit Reporting Act 2013 (Section 20) (Verification of Identity of Credit Information Subjects) (Amendment) Regulations 2019 (S.I. 433/2019) has been introduced to amend the Credit Reporting Act 2013. This is to avoid duplication for lenders or other Credit Information Providers (CIPs) in carrying out its identity verification processes. This amendment removes the requirement for a CIP to meet the verification requirements if it has already verified the identity of pursuant to its requirements under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 or it has complied with “…any other reasonable and reliable process to verify the identity of the credit information subject”.
EUROPEAN
EBA to clarify the prudential treatment applicable to own funds instruments
On 9 September 2019, the European Banking Authority (EBA) announced its intention to provide clarity on the appropriate treatment of the so-called own funds ‘legacy instruments' at the end of 2021, when the benefits of the grandfathering period will expire.
ECB introduces two-tier system for remunerating excess liquidity holdings
The European Central Bank (ECB) has decided to introduce a two-tier system for reserve remuneration, which exempts part of credit institutions’ excess liquidity holdings (i.e. reserve holdings in excess of minimum reserve requirements) from negative remuneration at the rate applicable on the deposit facility. This decision aims to support the bank-based transmission of monetary policy, while preserving the positive contribution of negative rates to the accommodative stance of monetary policy and to the continued sustained convergence of inflation to the ECB’s aim. The two-tier system will first be applied in the seventh maintenance period of 2019 starting on 30 October 2019.
ECB speech on post-crisis repair and the profitability
Andrea Enria, Chair of the Supervisory Board of the ECB in a presentation at the Forum Analysis, Milan on 17 September 2019 stated that post-crisis treatment has worked and banks have become more resilient and hold more and better-quality capital and more liquidity. Mr Enria stated that the profitability of banks remains disappointing albeit their profits increased in 2018. It was stated that in order to address profitability concerns, banks will have to address areas such as restructuring/disposal of NPLs, cost efficiency, refocussing business model viability and investment in technology/digitalization.
EBA launches its 2019 EU-wide transparency exercise
The European Banking Authority (EBA) has launched its regular EU-wide transparency exercise. In November 2019, together with the Risk Assessment Report (RAR), the EBA will release up to 2.2 m data points on about 130 EU banks. The data will cover capital positions, financial assets, risk exposure amounts, sovereign exposures and asset quality and will be based on supervisory reporting data, which will keep the burden for the banks to a minimum. Transparency exercises are conducted on an annual basis and are part of the EBA's efforts to monitor risks and vulnerabilities and to reinforce market discipline.
For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.
Date published: 10 October 2019