20 November 2015

EBF Board commends Financial Stability Board for providing clarity

The Board expressed its appreciation to the Financial Stability Board (FSB) for the clarity which it has provided under Mr. Mark Carney’s leadership in setting the global requirement for Total Loss Absorbing Capacity (TLAC) for globally systemically important banks.

The global TLAC standard, adopted at the recent G20 summit in Antalya, effectively addresses Too-Big-to-Fail by ensuring that large banks will maintain adequate capital resources within their group structure so that these banks can fail and be resolved irrespective of their global footprint, limiting the recourse to taxpayer monies.

European authorities now need to cautiously manage the consistency between TLAC and the EU’s MREL Requirement in order to preserve competitiveness of the banking sector.

“We are at a crucial moment when, eight years after the beginning of the financial crisis, we can turn the page of redefining the new regulatory framework for the banking industry and focus on financing the economy while adapting our business models to these new rules and to the impact of the digital technologies,” said Mr. Oudéa.

“Implementation should be the focus now.  While we support further efforts  to  ensure  harmonisation  and  reduce  the  fragmentation  of  the  European banking  market,  we  urge  regulators,  both  at  the  international  and  European  levels,  to  avoid  a second wave of regulations which would lead to an additional increase of capital requirements and create further uncertainty on the capacity of the European banking sector to finance our clients in an efficient and competitive way.”

The European Banking Federation (EBF) Board emphasised in particular its concerns over EU plans for Bank Structural Reform (BSR) that are due to be submitted for a vote in the European Parliament in the near future. The Board shares the view that, especially in the light of  the  adoption  of  the  TLAC  requirement  and  the adoption  of  resolution  mechanisms,  the  need  for  the  BSR  proposal  for  the  EU  should  be  re-examined.

Members of the Board also exchanged views on the calculation of Risk Weighted Assets (RWA) as a key metric for capital that banks need to hold against risk exposures. Policy-makers and regulators need to ensure to maintain a risk-based model for the calculation of banks’ capital ratios and make decisions in consideration of a competitive impact assessment. 

Press release

© EBF