14 January 2016

EBF Response to EBA consultation on RTS on criteria for a preferential treatment in cross-border intragroup financial support under LCR

The  overall  objective  of  European  banking  legislation  is  to  foster  the  harmonization  of supervisory practices and the establishment of a level playing field within the SSM area, in order to preserve financial stability and integration of the banking system. The European Union is a single market, in which the financial sector now benefits from a common prudential regulatory framework,  now  also  including  the Bank Recovery and Resolution Directive (BRRD) which provides a single rulebook for the resolution  of  banks  and  large  investment  firms  in  all  EU Member States.

Furthermore, within the European Union, the majority of European Union Member States (Euro Area  and other Member States opting to participate) are part of the Banking Union which provides a Single  Supervisory  Mechanism  (SSM)  and  a  Single  Resolution  Mechanism  (SRM). 

Residual National/local specificities are now identified and the ECB has a clear mandate (cf ECB National Options and Discretions Guide) to decide on whether and how to exercise these options. European Banking Federation (EBF) therefore now expects a fully harmonised regulatory treatment within all EU SSM Member States.

In fact, the LCR consideration of a liquidity facility between an EU parent institution and a local institution is not equivalent, depending of the countries where both institutions are established (Art.  425/4(d) CRR & Art 29 AD). Additional conditions have to be fulfilled if the EU parent institution is not from the same EU member:  e.g. low liquidity profile, daily follow-up etc.

This presents a distortion of the level playing-field in the single-market compared to institutions with EU parent institutions in the same Member State.

EBF would expect, to avoid any inequity at the very least within SSM EU groups, that this new RTS  guarantees  an  equal  treatment  for  institutions  having  their  parent  institution  within  the same Member State or within another SSM Member State.

Full response

© EBF