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During 2014, the EBA made significant progress and continued its crucial role in safe-guarding the integrity and stability of the EU banking sector. Among notable achievements were the further development of the Single Rulebook in banking, the continued promotion of supervisory convergence and the assessment of risks, as well as continued work to provide transparency into the EU banking sector. In addition, the EBA carried on with its mandates related to protecting consumers and monitoring financial innovation.
One of the main tasks of the EBA is to contribute to the creation of the Single Rulebook in EU banking. With it, the EBA lays the regulatory foundations at the basis of harmonised single EU banking sector, comprising both Euro and non-Euro areas. With its role to promote the consistent application of the Single Rulebook across the EU, the EBA also ensures convergence in the implementation of these rules in supervisory and resolution practices.
In the aftermath of the financial crisis, questions were raised as to why there were significant differences in the calculations of risk-weighted assets (RWAs) using banks’ internal models. The EBA has worked to restore confidence in the use of internal models for capital purposes. In this regard, European legislators have also acknowledged the need to introduce several additional checks and balances regarding their use, and the EBA has prepared several Regulatory Technical Standards (RTS) and benchmarks for supervisors to assess model outcomes and help improve transparency concerning the use of models.
In line with its additional responsibilities stemming from the new BRRD, the EBA focused on the recovery and resolution regulation and developed a number of regulatory products in this area. In relation to this, the EBA is currently working on about 40 guidelines, Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS), as well as providing advice to the European Commission regarding delegated acts. The principle of proportionality was central when preparing regulatory products on this topic, as it recognises the importance of the diversity of the EU banking system and explicitly refers to the need to develop and apply rules in such a way that this diversity is acknowledged and preserved.
During 2014, the EBA significantly contributed to global and EU policy-making on securitisation with the publication of an opinion, a discussion paper and guidelines.
The legislative changes introduced by the CRD to strengthen remuneration practices in institutions across the EU became effective on 1 January 2014. In the course of the year, the EBA developed a set of draft RTS to help identify categories of staff who have a material impact on an institution’s risk profile and produced other standards on different aspects of remuneration policy. The EBA also published its annual report on the aggregated figures for high earners in the banking sector between 2010 and 2012, and in 2015 the EBA will publish a remuneration benchmarking report.
The EBA consults all its stakeholders on a regular basis to ensure that their views and concerns are taken into account in the EU policy making process. Behind the EBA’s work on the Single Rulebook is a considerable amount of consultation and support activity. This has included the development of a Q&A process, impact assessment work, legal support in drafting technical standards, guidelines and recommendations, the correct application of Union law, compliance against global standards, involvement of stakeholders and coordination of information activities to correctly inform them.
To facilitate the implementation of the CRD IV/CRR, the EBA launched a Q&A tool that offers a one-stop interface for national supervisory authorities, institutions and their associations, as well as other stakeholders, to submit questions regarding the practical application and consistent implementation of EU regulation in the EU banking sector.
The EBA applies the principle of better regulation when carrying out its tasks, including in its efforts to develop the Single Rulebook, and performs impact assessment to support the EBA’s development of regulatory policy. In 2014, the EBA continued to perform a cost and benefits analysis of its technical standards, guidelines and recommendations, as well as of policy options included therein. Furthermore, the EBA published two dedicated reports monitoring the impact of the transposition of the Basel III requirements in the EU — in March for data up until June 2013, and in September for data up until December 2013. In addition, the EBA conducted an impact assessment of Liquidity Coverage Ratio (LCR) requirements in the EU in 2014 and published the results of the analysis in January 2015.