Tracker, Financial Services Regulation & Compliance - Banking


Central Bank of Ireland publishes list of ‘Frequently Asked Questions’ (FAQs) on Bank and Investment Firm Resolution Fund and Single Resolution Fund
The Central Bank has published answers to FAQs relating to the Bank Recovery and Resolution Directive and its implementation in Ireland. As well as explaining the Single Resolution Mechanism, the Bank and Investment Firm Resolution Fund and the Single Resolution Fund’s target of collecting at least 1% of covered deposits within participating Member States ('the levy'), built up over an initial 8 year period, the FAQs explain why the levy is being imposed on banks and in-scope investment firms and how the levy is calculated.

Opposition Bill on Excessive Variable Mortgage rates passes first legislative stage
The Dail has passed an Opposition Bill which will give the Central Bank the power to intervene in the setting of mortgage rates. Those proposing the Bill claim banks have failed to pass on the current low interest rates in Europe to customers on variable rates. It has been reported that Irish standard variable mortgage rates stand at 3.6%, which exceeds the Eurozone average of 2%. The Minister for Finance expressed misgivings about the bill for three reasons: (i) doubts about its constitutionality; (ii) the Central Bank did not want the power to regulate rates in the first place; and (iii) the fact that the ECB needs to be consulted before any proposed Bill could be enacted. While the Central Bank Governor Philip Lane has also expressed misgivings about the Bill, calling it a “very crude instrument with many downsides”,  he has committed to “work to the letter of a proposed law” if the power  for the Central Bank to cap interest rates is enacted. The Bill is now at Committee Stage, but is expected to be challenged.


European Banking Authority publishes Discussion Paper on uses of consumer data by financial institutions
In line with its mandate to monitor financial innovation, the EBA has published a discussion paper identifying the risks and benefits for consumers and financial institutions of using consumer data in innovative ways. This Discussion Paper, which seeks views from interested parties by 4 August 2016, is a precursor to an EBA decision on the mitigation of risks arising from the innovation of consumer data. The potential benefits already identified in the paper include cost reductions for both consumers and financial institutions and improved product quality. Risks include data misuse for consumers and reputational risks for financial institutions.  

European Banking Authority issues Opinion agreeing with EU Commission amendments to the rules on benchmarking of internal approaches
The EBA has issued an Opinion in agreement with the amendments to the EBA Implementing Technical Standards (ITS) on benchmarking of internal approaches proposed by the EU Commission. These amendments are being introduced in order to improve the quality of the benchmarking analysis performed by the EBA and Competent Authorities. The amended ITS includes data requirements which can be used in the 2016 benchmarking exercise and a requirement on all EU institutions using internal approaches to calculate capital requirements to submit the data on those portfolios to their Competent Authorities by 30 June 2016. The ITS will be amended annually.

European Banking Authority publishes Consultation on draft Guidelines on Liquidity Coverage Ratio disclosure
The EBA has launched a consultation on Guidelines which aim to harmonise and specify the qualitative and quantitative information institutions must disclose on liquidity. The draft Guidelines, on which views are sought before 11 August 2015, provide uniform tools for the liquidity disclosure framework, such as a harmonised table for the disclosure of general information on liquidity risk management, templates and relative instructions for the disclosure of information on the composition of the Liquidity Coverage Ratio and key figures and metrics in the context of liquidity risk. The EBA has indicated that these Guidelines are not expected to be applied sooner than 30 June 2017.

European Banking Authority issues Guidance for competent authorities in compiling IMF Financial Soundness Indicators
The EBA has issued guidance for deposit takers using statistical input derived from the EBA Implementing Technical Standards (ITS) on supervisory reporting in order to compute IMF Financial Soundness Indicators (FSIs), which are aggregated statistical measures used for monitoring the current financial health and soundness of financial sectors. The Guidance also aims to encourage a harmonised approach to FSI reporting within the EEA and increased transparency.

European Banking Authority publishes Decision confirming use of unsolicited credit assessments assigned by External Credit Assessment Institutions for calculating capital requirements
The EBA has published a Decision on the calculation of capital requirements as part of the Single Rulebook in banking which aims to ensure harmonisation in the EU in relation to the use of unsolicited credit ratings for determining institutions' own funds requirements. Institutions will be permitted to use these credit assessments for determining capital requirements where the EBA confirms those unsolicited ratings do not differ in quality from solicited ratings of that same ECAI. The Decision allows for the use of unsolicited ratings assigned by 22 ECAIs. 

European Banking Authority issues Opinion supporting proposed amendments to draft RTS on additional collateral outflows
The EBA has amended the historical look-back approach (HLBA) method for calculating additional collateral outflows following requests by the EU Commission for amendments using Basel Committee specifications. The draft Regulatory Technical Standard (RTS) on collateral outflows (developed following the Capital Requirements Regulation) now includes the Basel HLBA approach, which focuses on the largest net difference in collateral posted instead of the largest gross difference.

European Banking Authority publishes first list of Other Systemically Important Institutions in the EU
The EBA has published its first list of Other Systemically Important Institutions (institutions deemed systemically relevant other than Global Systemically Important Institutions) in line with the requirements of the Capital Requirements Directive. The list has been drawn up by Competent Authorities in the Member States on the basis of EBA Guidelines on size, importance, complexity and interconnectedness and is published by the EBA as a single point of disclosure for the list of Other Systemically Important Institutions across the Member States. In addition, each relevant authority discloses information for its own jurisdiction, to include further details on their rationale and identification process.

European Banking Federation calls for a one-year delay of the entry of application of the PRIIPs Regulation
The EBF has written to the EU Commission with Insurance Europe, the European Fund and Asset Management Association and the European Structured Investment Products Association calling for a one year postponement in the application date of the PRIIPs Regulation. The groups outline their concerns that the implementation timeline is unrealistic and will not give product distributors or manufacturers enough time to address operational challenges in implementing PRIIPS before the current 31 December 2016 deadline, considering that the final Regulatory Technical Standards for the development of the Key Information Documents (KID) are not due to be published until the third quarter of 2016. The letter states that the launch of KID, which aims to provide customers with a useful PRIIPs comparison tool, will require processes to be developed to ensure accurate data is produced and IT that systems will need to be tested, as well as the KID itself. Finally, the groups have also criticised the fact that a "number of highly complex and technical matters" included in the final draft RTS were not the subject of a public consultation.

European Banking Authority publishes final Guidelines on Stress Tests for Deposit Guarantee Schemes
The EBA has published Guidelines which set out a methodology for the running, planning and reporting of stress tests conducted by Deposit Guarantee Schemes (DGSs) in line with the Guarantee Schemes Directive. The methodology includes guidance on the various stages to be completed, the scenarios simulated, the areas and indicators to be measured and set out a number of harmonised priority tests which must be reported to the EBA in order to facilitate a comparable EU-wide peer review. The initial stress test is to be carried out by 3 July 2017.

European Securities and Markets Authority publishes Consultation Paper on draft technical advice under the Benchmarks Regulation
ESMA has published a Consultation Paper on draft technical advice (TA) under the Benchmarks Regulation and is seeking views on it until 30 June 2016. The TA will detail the implementation of the Benchmarks Regulation, adopted in April 2016, and includes defining benchmarks, rules for measuring the use of critical and significant benchmarks, setting out criteria for the identification of critical benchmarks and endorsing benchmarks.

Single Resolution Board publishes explanatory note on the calculation of individual 2016 ex-ante contributions by the Single Resolution Fund
The SRB has published an explanatory note for information purposes detailing the calculation of the individual ex-ante contributions of institutions to the SRF for the 2016 contribution period. The data used in the calculations was as reported to National Authorities at the beginning of 2016, following which the SRB adopted uniform data definitions, formats and instructions in its calculations. The SRB also adopted a set of rules to ensure that data validation was conducted uniformly. In its calculations, the SRB has deducted one-eighth of the contribution that was raised by National Authorities in 2015, and transferred to the SRF, from the amount due from each institution. According to the SRB, the 2016 payment obligation also takes into account any adjustments of the 2015 ex-ante contributions that were the results of restatements or revisions of the information on which that calculation was based. 

For further information please contact a member of the Financial Regulation team.

Date published: 03 June 2016