30 July 2020

EBF: EBA consultation on systemic risk buffers: EBF response

The EBF has responded to the consultation paper of the European Banking Authority (EBA) on draft Guidelines on the appropriate subsets of sectoral exposures to which competent or designated authorities may apply a systemic risk buffer in accordance with the Capital Requirements Directive.

Key concerns of the EBF members are related to a high degree of complexity of the proposal, the need to ensure consistency in the implementation of the framework, and the need to keep the operational burden for banks low. Therefore, the EBF calls on the EBA to consider the following key concerns:

• The EBA should eliminate overlaps with existing prudential requirements in order to avoid double counting of risks, especially between the systemic risk framework and the Pillar 2.
• The high degree of granularity in our view leads to a bottom-up approach to systemic risk, which raises the question if the framework is suitable to address systemic risk. The EBA may have to carefully review the level of granularity of data and whether those reflect other types of risk, like credit risk.
• The EBA, as the guardian of the Single Rulebook, should seek further consistency in the proposed framework. The current draft gives too much discretion at the national level which can only lead to a fragmentation across jurisdictions.
• The EBA should envisage the use of publicly available data in order to keep the operational burden low.
• We would like to take this opportunity to remind that the systemic risk buffer is an additional European requirement which does not exist in other jurisdictions, thus putting European banks and their clients at a disadvantage. This fact has become evident in the current COVID-19 crisis where authorities have had to ease off the SRB requirement in order to preserve the lending capacity of banks. It is a lesson to be learnt and we would encourage the EBA to issue an opinion for future revisions of the legislation.

EBF

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