Domestic: The CBI publishes updated guidance firms seeking authorisation as a payment institution or an electronic money institution or registration as an account information service provider. The Department of Finance publishes the results from the SME Credit Demand Survey 2023 and the responses to the consultation on the National Payments Strategy.
European: The European Parliament adopts texts to amend the Capital Requirements Directive and Regulation and publishes its adopted position on the proposed PSD3. The EBA publishes its annual assessment of banks’ internal approaches for the calculation of capital requirements and its opinion on new types of payment fraud and possible mitigants. The European Parliament has adopted the text for the proposed Late Payments Regulations.
CBI Guidelines for Authorisation of Payment and Electronic Money Institutions and Registration of Account Information Services Providers
On 9 April 2024, the Central Bank of Ireland (CBI) published updated guidance for applicant firms seeking authorisation as a payment institution or an electronic money institution or registration as an account information service provider (the guidelines).
The guidelines build on the CBI’s experience of authorisations in the sector and any previous communications and guidance issued to the industry. The document also provides clarity to requests from applicant firms and industry bodies.
Authorisation assessments are conducted on a case-by-case basis, with the nature, scale and complexity of an application being a major consideration. The CBI outlines its key areas of focus, including:
The Department of Finance publishes SME Credit Demand Survey 2023
On 25 April 2024, the Department of Finance (DoF) published the results of the SME credit demand surveys for 2023 (the report). The DoF commissioned the report to have a representative and reliable source of evidence on the business environment for SMEs and their need for credit.
The key results revealed:
The Minister for Finance, Michael McGrath TD, stated that the report is “… a critical tool to understand how the sector is performing and how needs for credit are being met.” This is the first SME credit demand survey conducted for a full calendar year, which was previously conducted on a bi-annual basis. The survey will be carried out annually in the future.
Department of Finance publishes responses to recent public consultation on the National Payments Strategy
On 24 April 2024, the DoF published a summary report of the responses to the recent public consultation on a new National Payments Strategy (NPS) for Ireland. The consultation was launched in December 2023 with the publication of the DoF’s consultation paper on the NPS.
The DoF received 85 formal responses to the consultation paper, with almost 30% of those responses being received from individuals. One common theme found in the responses was the need for holistic treatment of specific subject areas, including the risk of payment fraud in the context of instant payments.
Stakeholders will continue to be engaged on the NPS, including though a stakeholder workshop to be held in May 2024. The NPS will be drafted and finalised over the coming months with a view to publication in H2 2024.
European Parliament adopts texts to implement final Basel III reforms
On 24 April 2024, the European Parliament adopted the proposed texts for a directive to amend the Capital Requirements Directive (Directive 2013/36/EU) (CRD IV) and a regulation to amend the Capital Requirements Regulation (EU 575/2013) (CRR).
The new CRR 3, with along CRD 6, marks the finalisation of the Basel III reforms, which were a direct reaction to the 2008 financial crisis. CRR 3 aims to boost the financial resilience of the EU banking sector through the adoption of new prudential treatments, applying more stringent and risk sensitive standardised approaches for credit, market and operational risk, while imposing further restrictions on the use of internal models. CRD 6 will enhance supervisory powers and require the integration of ESG risks into banks’ governance arrangements and risk management frameworks.
Council of the European Union will adopt the proposed texts, after which they will be signed into law and published in the Official Journal. CRR 3 will enter into force 20 days after its publication in the Official Journal.
European Parliament adopts its position on proposed PSD3 and PSR
On 23 April 2024, the European Parliament adopted its position on the proposed amendments to the Payment Services Directive (PSD3) and the proposed new Payment Services Regulation (PSR), which aim to create a more harmonised payments and electronic money services sector in the EU.
The European Parliament has closed the first reading of the legislative proposals, and work will be followed up by the new Parliament after the June 2024 European elections. The Council of the European Union will also now need to adopt its position on the legislative proposals before inter-institutional negotiations can begin after the elections.
EBA publishes its final guidelines on resubmission of historical data under the EBA reporting framework
On 9 April 2024, the European Banking Authority (EBA) published its final guidelines on the resubmission of historical data under the EBA reporting framework (the guidelines).
The guidelines were issued following a recommendation included in an EBA report on the costs of compliance with supervisory reporting requirements that set out an approach with the aim of limiting the number of historical periods subject to resubmission. Financial institutions will be expected to resubmit the corrected data for the current reporting date, and historical data for past reference dates, going back at least one calendar year.
The new precision requirement will be applicable as of 1 April 2025.
EBA publishes annual assessment of banks’ internal approaches for the calculation of capital requirements
On 12 April 2024, the EBA published its 2023 reports on the annual market and credit risk benchmarking exercises (the reports). The exercises aim at monitoring the consistency of risk weighted assets (RWAs) across all EU institutions authorised to use internal approaches for the calculation of capital requirements.
The reports confirms that most participating banks have seen a relatively low dispersion in the initial market valuation of most instruments, and a decrease in the dispersion in the value at risk submissions compared to the previous exercise. FX portfolios showed a lower level of dispersion than other asset classes.
Competent authorities were also required to complete a questionnaire on banks participating in the exercise to supplement the quantitative analysis.
The EBA consults on draft technical standards on the specification of long and short positions under the derogations for market and counterparty risks
On 24 April 2024, the EBA launched a public consultation on its draft regulatory technical standards (RTS) on the method for identifying the main risk driver and determining whether a transaction represents a long or a short position under the CRR.
The RTS propose a methodology to identify the main risk driver for non-derivative and derivative positions on the sensitivities as referred to in the market risk standardised approach (FRTB-SA) or on add-ons as defined under the standardised approach for counterparty credit risk (SA-CCR) for derivative positions.
The consultation will run until the 24 July 2024 and is part of the Phase 1 deliverables of the EBA roadmap on the implementation of the EU banking package in the area of market risk. The public hearing of the RTS draft will be held on 2 July 2024.
The Basel Committee on Banking Supervision publishes a consultation on guidelines for counterparty credit risk management
On 30 April 2024, the Basel Committee on Banking Supervision (Basel Committee) published a consultation on guidelines for counterparty credit risk (CCR) management (the guidelines).
The guidelines replace the Basel Committee’s “Sound practices for banks’ interactions with highly leveraged institutions”. The guidelines cover key practises to resolve the long-standing industry weaknesses in CCR management, including the need to:
The consultation runs until 28 August 2024.
The EBA has published its opinion on new types of payment fraud and possible mitigants
On 29 April 2024, the EBA published its opinion on new types of payment fraud and possible mitigants (the opinion).
The EBA observed that the mandatory application of strong customer authentication (SCA) under the revised Payment Services Directive (PSD2) has been successful in reducing fraud based on the stealing of customers’ credentials. However, the EBA noted that fraudsters managed to adapt their techniques, giving rise to fraud types of a more complex nature.
To address these new fraud types, the EBA is of the view that new security measures are needed, in addition to those included in the EU Commission’s proposals for a PSD3 and the PSRs, as well as the recently adopted Instant Payments Regulation.
European Parliament adopts text for proposed Late Payments Regulation
On 23 April 2024, the European Parliament adopted the text for the proposed regulation on combatting late payment in commercial transactions (the Regulation).
The Regulation will replace the current Late Payments Directive (Directive 2011/7/EC) (the Directive), with a view to addressing shortcomings in the Directive to protect business from the negative effects of payment delay in commercial transactions.
The text will now be put to the Council of the European Union to be signed into law.
For more information on these topics please contact any member of A&L Goodbody's Financial Regulation Advisory team.
Date published: 21 May 2024
