This week in "Brussels"
20 December 2018
Non-performing loans, EBA's annual report on risks and vulnerabilities in the EU banking sector, leverage ratio window-dressing, Benchmark Regulation, EBA, ESMA call for more action by financial institutions in their Brexit-related communication to customers, 2018 ECMI Statistical Package and more.
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Articles from 13 December 2018 - 20 December 2018 |
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Banking Union |
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European Council: Non-performing loans: political agreement reached on capital requirements for banks' bad loans
The Council presidency and the European Parliament reached a provisional political agreement on capital requirements applying to banks with non-performing loans (NPLs) on their balance sheets. The deal will now be submitted for endorsement by EU ambassadors. View Article |
EBA publishes final Guidelines on disclosure of non-performing and forborne exposures
The disclosure will allow market participants and stakeholders to have a better picture of the quality of the banks' assets, the main features of their non-performing and forborne exposures, and in the case of more troubled banks, the distribution of the problematic assets and the value of the collateral backing those assets. View Article |
EBA sees further improvements in EU banks resilience but highlights challenges connected to profitability, funding and operational risk
The EBA published its annual report on risks and vulnerabilities in the EU banking sector. Overall, the EU banking sector has continued to benefit from the positive macroeconomic developments, which contributed to the increase in lending, further strengthening of banks' capital ratios and improvements in asset quality. Profitability has not yet reached sustainable levels. View Article |
EBA to run its next EU-wide stress test in 2020
In its meeting on 12 December 2018, the Board of Supervisors of the European Banking Authority (EBA) decided to carry out its next EU-wide stress test in 2020, in line with its previous decision to aim for a biennial exercise. View Article |
Basel Committee consults on disclosure requirement to address leverage ratio window-dressing
This consultative document seeks the views of stakeholders on revisions to leverage ratio Pillar 3 disclosure requirements to include disclosures of the leverage ratio exposure measure amounts of securities financing transactions, derivatives replacement cost and central bank reserves. View Article |
ECB decides on technical parameters for the reinvestment of its asset purchase programme
The Governing Council of the European Central Bank (ECB) decided on the technical parameters for the reinvestment of the principal payments from maturing securities purchased under its asset purchase programme (APP) after net asset purchases cease at the end of December 2018. View Article |
ECB will directly supervise 119 banks in 2019
The number of significant institutions that will be directly supervised by the European Central Bank (ECB) from 1 January 2019 stands at 119 following the annual review of significance and ad hoc assessments. The changes in significance statuses are the result of new group structures, license withdrawals, mergers and other developments. View Article |
ECB's De Guindos: Redesigning Europe’s financial landscape
The ECB's Vice president said that finalising EMU reforms, completing banking union and capital markets union must stand out as unquestionable objectives that will strengthen the financial system in the long run. View Article |
IMF Blog: Five actions to strengthen the euro area Banking Union
Dealing with problem banks in a prompt, efficient, and even-handed manner is essential for the European banking union. Much progress has been made, but more needs to be done to strengthen both institutions and practices. Authors outline the recommendations in this area proposed as part of the IMF’s recent assessment of the euro area financial sector. View Article |
EBA launches consultation to amend Regulation on benchmarking of internal models
The proposed changes aim at simplifying the portfolio's structure for the credit risk part of the exercise, and getting more insights into the model used for pricing for the market risk part of the exercise. View Article |
ESMA updates its Q&As regarding the Benchmark Regulation
ESMA updated its Questions and Answers on the Benchmarks Regulation (BMR). View Article |
ISDA FAQs on the procedures for excluding non-EU non-financial counterparties under the capital requirements regulation
These FAQs address the Regulatory Technical Standards published in the EU Official Journal in May 2018, which set out the procedures for excluding third-country non-financial counterparties (NFCs) from the Credit Value Adjustment (CVA) capital risk charge under the Capital Requirements Regulation. View Article |
EBA calls for more action by financial institutions in their Brexit-related communication to customers
As a follow up to its June 2018 Opinion on financial institutions' preparedness for the UK withdrawal from the EU, the EBA reminds affected financial institutions to maintain their efforts in effective contingency planning and to increase their efforts in communicating to customers. View Article |
Taxonomy: EBF responds to the EP draft report
EBF supports the holistic and harmonized approach of the European Parliament to the sustainability agenda. To mobilize the capital for sustainable activities, EBF recognizes the need to identify in a clear and operational manner what constitutes sustainable characteristics, improve transparency, data collection as well as step up the educational efforts. View Article |
FCA announces proposals to fundamentally reform the way banks charge for overdrafts and extends protections for high-cost credit products
The FCA has announced the next package of measures forming part of its high-cost credit review. It has announced proposals to change how banks charge for overdrafts, which would bring to an end to banks charging higher prices for unarranged overdrafts. Alongside this the FCA has published the results of its review into the retail banking market. View Article |
EBA consults on guidelines on ICT and security risk management
These Guidelines establish requirements for credit institutions, investment firms and payment service providers (PSPs) on the mitigation and management of their information and communication technology (ICT) risks and aim to ensure a consistent and robust approach across the Single market. View Article |
European Council: Payments in the EU: Council confirms political agreement to reduce charges and increase transparency
The EU is working towards making payments in euro cheaper. Soon, paying or withdrawing money in euros will cost the same price at home or anywhere in the EU. View Article |
EBA issues a call for expressions of interest to participate in its working group on APIs under PSD2
The EBA issued a call for expressions of interest to participate in its working group on Application Programming Interfaces under PSD2 (WG-API). The group will be composed of EBA staff, national competent authorities and representatives of a variety of external stakeholders, and will be chaired by the EBA. View Article |
EBA launches selection procedure to appoint new Chairperson
The Board of Supervisors of the EBA has launched an open selection procedure for the appointment of a new Chairperson following the appointment of the EBA's current Chairperson, Andrea Enria, to be the Chair of the Supervisory Board of the Single Supervisory Mechanism from 1 January 2019. View Article |
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Capital Markets Union |
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Recent Developments in European Capital Markets: Key findings from the 2018 ECMI Statistical Package
This paper provides an overview of the key findings observed in the 2018 ECMI Statistical Package, a comprehensive and annually updated database on the dynamics of European and global capital markets (covering the US, Japan, China and other relevant markets). View Article |
ESMA is ready to review UK CCPs’ and CSDs’ recognition applications for a no-deal Brexit scenario
ESMA Board of Supervisors supports continued access to UK CCPs, in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU. View Article |
ESMA tells firms to provide clients with information on the implications of Brexit
The statement is addressed to UK firms that provide services in EU27 Member States, as well as EU27 firms that deal with clients based in the UK. View Article |
ESAs publish joint EMIR STS standards
The European Supervisory Authorities Authority published two joint draft Regulatory Technical Standards to amend the RTS on the clearing obligation and risk mitigation techniques for non-cleared OTC derivatives. View Article |
ESMA publishes final report on the tick size regime
ESMA published its Final Report amending the tick size regime (Commission Delegated Regulation (EU) 2017/588 (RTS 11)). View Article |
ICMA publishes primary markets technology mapping directory
The ICMA primary markets technology mapping directory compares the key features and capabilities of over 20 technology solutions that are available for a range of functions within the issuance process of debt securities. View Article |
ESMA consults on measures to promote sustainability in EU capital markets
ESMA launched three public consultations on sustainable finance initiatives to support the European Commission’s Sustainability Action Plan in the areas of securities trading, investment funds and credit rating agencies. View Article |
ESMA updates Q&A on implementation of CRA Regulation
ESMA updated its Questions and Answers on the Credit Rating Agencies Regulation (CRAR). View Article |
ESMA registers DBRS Ratings GmbH as credit rating agency
ESMA, the EU’s direct supervisor of credit rating agencies (CRAs), has registered DBRS Ratings GmbH (DBRS RG) as a CRA under the CRA Regulation. View Article |
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Clients Union |
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Preventing misuse of personal data to influence EP elections - Council ready for negotiations with Parliament
EU ambassadors backed a proposal to impose financial penalties on European political parties and foundations if they try to take advantage of breaches of data protection rules to influence the outcome of EP elections. View Article |
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Insurance |
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EIOPA announces results of the 2018 insurance stress test
The EIOPA published the results of its 2018 and fourth Stress Test for the European insurance sector. Overall, the exercise confirmed the significant sensitivity to market shocks combined with specific shocks relevant for the European insurance sector. On aggregate, the sector is adequately capitalised to absorb the prescribed shocks. View Article |
IAIS publishes public consultation document on a holistic framework for systemic risk in the insurance sector
The IAIS has published for public consultation its proposed holistic framework for the assessment and mitigation of systemic risk in the insurance sector. View Article |
EIOPA publishes its third annual analysis on the use and impact of long-term guarantees measures and measures on equity risk
The EIOPA submitted to the European Parliament, the Council of the European Union and the European Commission, its 2018 and third Annual Report on Long-Term Guarantees Measures (LTG) and Measures on Equity Risk. View Article |
EIOPA updates representative portfolios to calculate volatility adjustments to the Solvency II risk-free interest rate term structures
The EIOPA published updated representative portfolios that will be used for calculation of the volatility adjustments (VA) to the relevant risk-free interest rate term structures for Solvency II. View Article |
EIOPA: Change of financial market data provider for the calculation of Solvency II risk-free interest rate term structures
The EIOPA in compliance with its Financial Regulation conducted a public procurement procedure for the provision of financial market data for the calculation of the technical information relating to the risk-free interest (RFR) term structures. View Article |
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Corporate Governance/Accounting |
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FRC issues revised auditing standard and consults on guidance for quality bank audits
The FRC has issued an International Standard on Auditing Accounting Estimates and Related Disclosures, covering the audit of expected credit losses in banks and which reflects the increased importance and complexity of estimates in financial statements. View Article |
IASB to propose narrow-scope amendment to IFRS 17
The IASB has voted to propose to amend IFRS 17, the insurance contracts Standard issued in May 2017. View Article |
IASB proposes clarifications for companies assessing whether contracts will be loss-making
The IASB has published for public comment proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets to specify which costs a company should include when assessing whether a contract will be loss-making. View Article |
EFRAG requests comments on its Draft Endorsement Advice on Definition of Material
EFRAG is consulting on both its assessment of Definition of Material (Amendments to IAS 1 and IAS 8) against the technical criteria in the EU and on its assessment of whether the Amendments are conducive to the European public good. View Article |
FRC issues a suite of staff factsheets on aspects of FRS 102
The FRC has issued a suite of staff factsheets on aspects of FRS 102, including the 2017 triennial review. The factsheets are intended to assist stakeholders by highlighting certain requirements of FRS 102. View Article |
ECA Journal "International cooperation in audit"
Cooperation between and among supreme audit institutions (SAIs) is the special theme of the November/December 2018 edition of the ECA Journal. The ECA zooms in on cooperation within the EU, such as the Contact Committee of EU SAIs. And the ECA looks at networks operating beyond the EU. View Article |
IASB completes review of IFRS 13 Fair Value Measurement
The IASB has published a summary report on its Post-implementation Review (PIR) of the fair value measurement Standard, IFRS 13, which showed that the Standard works as intended. View Article |
ACCA responds to reviews of the audit market
ACCA has welcomed publication of findings from two major reviews of the UK audit market: the Competition and Markets Authority’s Statutory audit services market study and the Kingman Independent Review of the FRC; and the announcement of a further Brydon Review into UK Audit Standards. View Article |
ECIIA: The future of corporate reporting
Sustainability is likely to be a major focus for the next wave of corporate reporting reform for the EC, according to speakers at a recent Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG Fisma) conference. View Article |
Accountancy Europe: IASB’s discussion paper on Financial Instruments with Characteristic of Equity & EFRAG’s draft comment letter
Accountancy Europe appreciates the IASB’s efforts to issue a discussion paper around the distinction between liabilities and equity for the issuers of financial instruments. View Article |
Deloitte comments on financial instruments with characteristics of equity
Deloitte has responded to the IASB's discussion paper 'Financial Instruments with Characteristics of Equity' that was published in June 2018. View Article |
Ferma-ECIIA: Update Cyber Risk Governance Report
Ferma and ECIIA have called for organisations to create dedicated internal cyber risk governance groups to address digital risks across the whole enterprise as the threats evolve. View Article |
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Anti-Money Laundering |
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Anti-money laundering: Council agrees position on reinforced supervision for banks
EU ambassadors agreed the Council's negotiating position on a proposal reinforcing the role of the European Banking Authority as regards risks posed to the financial sector by money laundering activities. View Article |
PIIE: A Better European Architecture to Fight Money Laundering
This study recommends the creation of a European AML Authority that would supervise banks, other financial institutions, and nonfinancial firms for AML purposes. View Article |
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Financial Services Policy |
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ECB: TIBER-EU White Team Guidance
The Threat Intelligence-based Ethical Red Teaming (TIBER-EU) Framework enables European and national authorities to work with financial infrastructures and institutions to put in place a programme to test and improve their resilience against sophisticated cyber attacks. View Article |
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Financial |
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EU agrees new rules on business insolvency
The Council, at the level of ambassadors, confirmed an agreement reached with the Parliament on the directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures. View Article |
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Economic |
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Main results - Euro Summit, 14/12/2018
EU leaders adopted a statement endorsing all elements of the Eurogroup report on EMU deepening, including a term sheet on the ESM reform, the terms of reference of the common backstop to the SRF and a way forward on the banking union. View Article |
EurActiv: ECB chief Draghi downgrades economic forecast as risks persist
European Central Bank President Mario Draghi presented the bank’s downgraded economic forecast for the eurozone for this year and next, as uncertainties and risks remain prominent in the region. View Article |
Bruegel: Does the Eurogroup’s reform of the ESM toolkit represent real progress?
The deal reached on eurozone reform at the Eurogroup contains a number of incremental but potentially key technical reforms – in particular regarding the ESM toolkit. Some constitute an improvement, but there are also clear flaws that should be corrected at the Euro Summit. View Article |
OMFIF: Radical risk-sharing rethink
Now that the ECB's four-year €2.6tn bond-buying programme is coming to an end, writes Marcello Minenna, there are other ways, more overt and effective, to stabilise monetary union, through a more concentrated form of risk-sharing. View Article |
BBC: Italy budget deal struck with Europe after months-long row
After months embroiled in a high-profile diplomatic row, Italy has agreed a deal on its budget with the European Commission. View Article |
ACCA: Tax authorities must recognise the risks in implementing digital tax collection tools
According to its most recent report: Technology tools and the future of tax administration, ACCA urges tax administrators to manage the risk of imposing restrictive technological requirements on taxpayers. View Article |
Euro area international trade in goods surplus €14.0 bn
The first estimate for euro area (EA19) exports of goods to the rest of the world in October 2018 was €209.7 billion, an increase of 11.4% compared with October 2017 (€188.3 bn). View Article |
Annual inflation down to 1.9% in the euro area
The euro area annual inflation rate was 1.9% in November 2018, down from 2.2% in October. A year earlier, the rate was 1.5%. European Union annual inflation was 2.0% in November 2018, down from 2.2% in October. A year earlier, the rate was 1.8%. View Article |
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Graham's tweets |
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© Graham Bishop
Banking Union