This week in "Brussels"
11 April 2019
Reform of capital requirements for banks' NPLs, France pushes for consolidation of European banks, City alarmed at EU’s no-deal Brexit equity trading plan, CMU, MiFID II, PRIIPs, UCITS, Commission proposal for a PEPP, de Galhau on a "financial Eurosystem" post-Brexit, Temporary Eurobill Fund.
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Articles from 04 April 2019 - 11 April 2019 |
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Banking Union |
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European Council: Council adopts reform of capital requirements for banks' non-performing loans
The new rules set capital requirements applying to banks with NPLs on their balance sheets. The aim of the reform is to ensure that banks set aside sufficient own resources when new loans become non-performing and to create appropriate incentives to avoid the accumulation of NPLs. View Article |
BCBS: Consolidated Basel framework
The consolidated framework aims to improve the accessibility of the Basel Committee's standards and to promote consistent global interpretation and implementation. It was published together with a consultative document to gather feedback on various proposed technical amendments to the standards. View Article |
New Europe: France pushes for consolidation of European banking sector
The French government is signalling its support for the consolidation of the European banking sector, with both the Minister of Finance and the Governor of the Banque de France calling for appropriate regulation. View Article |
Oliver Wyman: Tackling market fragmentation in global banking
Douglas J. Elliott, partner at Oliver Wyman, lays out barriers to cross-border banking and, based on their broad scope, concludes that there is a need to step back and try again to create a new social compact between home and host country authorities View Article |
BCBS: Standardised approach – implementing the mapping process
This document sets out guidelines for supervisors in assigning the risk assessments of an eligible external credit assessment institution (ECAI) to the risk weights available under the standardised approach to credit risk. It replicates the guidelines contained with Basel II. View Article |
EBA publishes final draft RTS on the conditions to allow institutions to calculate KIRB in accordance with purchased receivables approach
These draft RTS aim at striking the right balance between the need to acknowledge the specific circumstances under which institutions calculate capital requirements in the context of a securitisation transaction and the need to maintain appropriately safe and prudent requirements on the internal modelling of capital requirements. View Article |
ECB: Results of the April 2019 euro area bank lending survey
Credit standards broadly unchanged for loans to enterprises and tightened for housing loans. Firms’ demand for loans stable, while housing loan demand continued to increase. ECB’s asset purchases continue to support bank lending volumes. View Article |
ECB Banking Supervision publishes results of 2018 SREP
The ECB published the aggregate outcome of its 2018 Supervisory Review and Evaluation Process (SREP). The overall SREP demand for common equity tier 1 (CET1) capital increased to 10.6% in 2018 from 10.1% in 2017, which was driven by the last step of the phase-in of the capital conservation buffer. View Article |
Bank of England: Supervising international banks: Revision of the branch return
In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out its proposals for changes to the format and content of the Branch Return Form (the Return), and additional guidance to assist firms in completing it. View Article |
ECB nominates Yves Mersch as Vice-Chair of the Supervisory Board
Governing Council submits proposal for new Vice-Chair of the ECB’s Supervisory Board to European Parliament. Council of the European Union to give final approval after parliamentary vote. View Article |
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Capital Markets Union |
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ESMA has adopted new recognition decisions for the three UK CCPs and the UK CSD in the event of a no-deal Brexit on 12 April
The recognition decisions would take effect on the date following Brexit date, under a no-deal Brexit scenario. View Article |
Financial Times: City of London alarmed at EU’s no-deal Brexit equity trading plan
EU watchdogs lists 6,200 securities that EU banks and investors must trade in the bloc. View Article |
Joint trade associations letter on the equivalence of EEA trading venues
ISDA, and a number of national associations, have recently written to the European authorities requesting the equivalence of UK trading venues. View Article |
Report on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities
The report states that national competent authorities of the entities involved in assembling SBBSs or in the SBBS market and ESMA should closely coordinate their supervision and ensure that their decisions are consistent. View Article |
Remarks by Vice-President Valdis Dombrovskis at the informal ECOFIN press conference in Bucharest
Mr Dombrovskis said that he counted on the next European Commission to continue to champion the Capital Markets Union project. He added that there is a strong political support from Finance Ministers and Central Bank Governors for this project. View Article |
Speech by Vice-President Dombrovskis at the Eurofi High-level Seminar 2019 - Bucharest, Romania
Mr Dombrovskis spoke about how regulators help Europe's financial sector respond to the opportunities and challenges of the future, such as Brexit and the CMU project. View Article |
ESMA updates register of derivatives to be traded on-venue under MiFIR
ESMA updated the public register of those derivative contracts that are subject to the trading obligation under the Markets in Financial Instruments Regulation (MiFIR). View Article |
ESMA publishes MiFID II supervisory briefing on appropriateness and execution-only
This supervisory briefing is an updated version of ESMA’s 2012 supervisory briefing on the same topic and takes into account the new version of ESMA’s guidelines on suitability published on 28 May 2018 with respect to aspects also relevant to the appropriateness rules. View Article |
ESMA updates Q&A on MiFIR data reporting
The Q&As provide clarifications in relation to the requirements for submission of reference data under MiFIR. In particular, the Q&As relate to reporting obligations for trading venues operating on the basis of a specified list of instruments. View Article |
ICMA publishes 2019 legal opinions on global master repo agreement
ICMA published the 2019 updates to the ICMA GMRA legal opinions which support the Global Master Repurchase Agreement, the standard agreement for international repo transactions. View Article |
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Clients Union |
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European Supervisory Authorities publish Q&A on the Key Information Document for PRIIPs
The European Supervisory Authorities published additional questions and answers on the Key Information Document requirements for Packaged Retail and Insurance-based Investment Products (PRIIPs). View Article |
IFAC: Global ethics board sets out top priorities
The IESBA released its Strategy and Work Plan, 2019-2023. Titled Elevating Ethics in a Dynamic and Uncertain World, the publication describes the board’s strategy and priorities toward the setting of high-quality, future-ready ethics standards for professional accountants that are widely adopted. View Article |
ACCA welcomes the publication of the EC’s High-Level Expert Group on Artificial Intelligence’s Guidelines for Trustworthy AI
ACCA supports the aims of these important guidelines to establish a clear and comprehensive framework for achieving trustworthy, ethical and robust AI. Confidence in the technology’s development and its applications is vital for its success and society’s buy-in. View Article |
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Asset Management |
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Commission proposal for a regulation on a pan-European personal pension product (PEPP)
The PEPP, one of the key measures of the Commission’s action plan to strengthen the capital markets union, aims at helping consumers save for retirement. View Article |
ESMA issues first pan-EU overview of use of supervisory sanctions for UCITS
The European Securities and Markets Authority issued its first annual report on sanctions imposed by national competent authorities (NCAs) under the Undertakings for Collective Investments in Transferable Securities (UCITS) Directive. View Article |
ESMA publishes responses to its consultation on liquidity stress test guidelines for investment funds
The European Securities and Markets Authority (ESMA) has published the responses received to its Consultation on draft guidelines on liquidity stress test for investment funds. View Article |
Investment Association: New stewardship code sets the right path but falls short on several key areas
The Investment Association published its response to the FRC consultation on the proposed new stewardship code, which welcomes the broad direction of travel but highlights several key areas where the proposed code falls short of creating the better market for stewardship that shareholders want. View Article |
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Corporate Governance/Accounting |
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Insurance Europe: Monitoring bodies for GDPR codes of conduct must remain optional
Europe’s insurers have warned that the European Data Protection Board’s (EDPB) draft guidelines on codes of conduct and monitoring bodies go beyond the text of the General Data Protection Regulation (GDPR). View Article |
ESBG response to the EFRAG Draft Comment Letter on IASB ED/2018/2
ESBG commented on the EFRAG Draft Comment Letter on IASB ED/2018/2 Onerous Contracts – Cost of Fulfilling a Contract – Proposed amendments to IAS 37 as issued on 1 February 2019. View Article |
ACCA: BEIS Committee’s report on the future of audit
ACCA has published its statement on BEIS Committee’s report on the future of audit. View Article |
Accountancy Europe: Evolution of SME audit in Europe from the perspective of the legislation and auditing standards
Accountancy Europe published an article on the evolution of SME audit in Europe. View Article |
IFAC: Effective international organizations critical to solving global challenges
As mounting global economic, social and environmental challenges test financial markets and social stability, IFAC hosted 23 leaders of international organizations at the Sixth Annual Meeting of the Partnership of international organisations spearheaded by the OECD. View Article |
ACCA: Machine learning will become a reality in the near future
ACCA´s new report “Machine learning: more science than fiction” highlights how new tech developments have a massive potential for the accountancy profession and focuses on machine learning, which is the ability of computers to ‘learn’ and make decisions based on analysis of large sets of data. View Article |
ECGI: Firms’ rationales for CEO duality - evidence from a mandatory disclosure regulation
ECGI's paper is the first to present evidence on the reasons that firms state for their board leadership structure. According to results, the stock market considers a “one-size-fits-all” approach to CEO duality inappropriate. View Article |
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Anti-Money Laundering |
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EBA centralises information on administrative sanctions or measures under AMLD4
The EBA brought together, on its website, links to national competent authorities' websites where users will be able to access information on sanctions and administrative measures competent authorities have imposed for breaches of applicable anti-money laundering and counter-terrorist financing (AML/CFT) obligations. View Article |
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Financial Services Policy |
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The Joint Committee of the ESAs publishes its 2018 Annual Report
The Joint Committee of the European Supervisory Authorities (ESAs) – EBA, EIOPA and ESMA – published its 2018 Annual Report providing a detailed account of all the joint work achieved in the past year. View Article |
Bank of France's de Galhau: How to develop a "financial Eurosystem" post-Brexit
François Villeroy de Galhau, Governor of the Bank of France, looks beyond Brexit to talk about how Europeans should use the demands created by the current context to build a more integrated "financial Eurosystem", and add some pillars to Europe's financial sovereignty. View Article |
EIOPA: ESAs publish joint advice on information and communication technology risk management and cybersecurity
The European Supervisory Authorities (ESAs) published two pieces of Joint Advice in response to requests made by the European Commission in its March 2018 FinTech Action Plan. View Article |
BIS: BigTech and the changing structure of financial intermediation
This paper investigates the entry of big technology companies (BigTech) into financial services. It seeks to address three questions: What economic forces are driving this development? Do BigTech lenders have an information advantage compared with traditional data or processing methods, particularly when gauging creditworthiness? Do firms receiving BigTech credit perform differently from competitors? View Article |
Insurance Europe: EC expert group proposals step forward towards credible EU green bond market
Insurance Europe supports the development of a voluntary EU Green Bond Standard (GBS). In its response to a consultation by the European Commission’s Technical Expert Group (TEG) on its recommendations for the development of a GBS, Insurance Europe welcomed the TEG’s aim of enhancing the comparability of green bonds across issuers. View Article |
EBF response: EU green bond standard
The EBF provides its feedback on the key elements of TEG’s interim report. This report proposes the content of an EU Green Bond Standard (EU GBS), explains its purpose, sets its ambition level, and explains how TEG thinks the creation of this EU GBS will address the barriers to the green bond market’s further development and will support its role in channelling substantial financial flows to green projects. View Article |
Accountancy Europe: EC’s TEG preliminary recommendations on EU green bond standard
Accountancy Europe has responded to the European Commission Technical Expert Group (TEG) preliminary recommendations for an EU green bond standard. View Article |
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Political |
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POLITICO: Salvini aims high with populist alliance for Europe
Italian far-right leader Matteo Salvini has declared that he aims to form the biggest group in the European Parliament as he joined forces with Eurosceptics from outside his current political family to launch his election campaign. View Article |
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Economic |
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Reuters: Settling bills? Pooled eurozone debt could be trialed in quick bites
Policymakers looking to persuade Germany and other wealthy euro zone countries to pool their debt with less well-off neighbors may need to keep things short and simple. Graham Bishop told Reuters the short-term nature of his proposal for a Temporary Eurobill Fund made it an ideal testing vehicle. View Article |
Main results - General Affairs Council
The Council discussed the next multiannual financial framework and the Article 7 procedures concerning Hungary and Poland. It also adopted conclusions on the 2030 Agenda on Sustainable Development. View Article |
Main results - Eurogroup
The Eurogroup welcomed the progress made by Greece on the implementation of reform commitments. In inclusive format, ministers continued work on the euro area budgetary instrument. View Article |
Joint statement of the 21st EU-China summit
European Council President Donald Tusk, European Commission President Jean-Claude Juncker and Li Keqiang, Premier of the State Council of the People’s Republic of China, met in Brussels for the 21st EU-China Summit. View Article |
EU28 current account surplus €38.6 bn
The EU28 seasonally adjusted current account of the balance of payments recorded a surplus of €38.6 billion (1.0% of GDP) in the fourth quarter of 2018, up from a surplus of €36.2 billion (0.9% of GDP) in the third quarter of 2018. View Article |
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Graham's tweets |
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© Graham Bishop
Banking Union