Financial Services Regulation & Compliance - Banking May 2018

DOMESTIC

Department of Business publishes First Quarter Report on SME Credit Guarantee Scheme

The Department of Business, Enterprise and Innovation published its First Quarter Report on the Department's SME Credit Guarantee Scheme, which guarantees up to 75% of loans made by accredited lenders to small and medium-sized enterprises (SMEs). The report noted that facilities of almost €4.5m had been sanctioned under the scheme in Q1 2018. The Wholesale/ Retail Trade and Repairs sectors received the most loans at 22% of the total.

EUROPEAN

EBA supports Commission in implementing the Basel III framework 

The European Banking Authority (EBA) welcomed the European Commission's call for advice in implementing the Basel III framework on minimum standards for banking regulation. The EBA will carry out a quantitative and qualitative assessment of the potential impact of the Basel III framework across the EU economy. By July, the EBA will invite various institutions to take part in a data collection which will form the basis of the EBA's policy recommendations on the Basel III framework.

ECB publishes Financial Integration in Europe report

The European Central Bank (ECB) published a report outlining how financial integration improved in 2017 in prices but not in quantities. The euro area has proved to be more resilient as seen in foreign direct investment relative to portfolio equity investment.

European Union (Capital Requirements) (Amendment) Regulations 2018

This statutory instrument amends the European Union (Capital Requirements) Regulations 2014 (S.I No.158 of 2014). The amendments include technical amendments to definitions, to notifications to be sent to competent authorities of other Member States in certain circumstances, to the provision ensuring that institutions have in place procedures for employees to internally report potential or actual breaches, to the provision covering contraventions, and to clarify that a failure by the Bank to notify an applicant of rejection in the case of certain applications is an appealable decision.

EBA launches a consultation on guidelines on disclosure of non-performing and forborne exposures

The aim of the guidelines is to enhance transparency regarding the information that credit institutions need to disclose in relation to non-performing and forborne exposures and foreclosed assets. The guidelines address those institutions subject to disclosure requirements stated in the Capital Requirements Regulation. The consultation is open until 27 July 2018.

ECB endorses worldwide strategy to reduce risk of wholesale payments fraud

The Committee on Payments and Market Infrastructures published a common strategy to improve security in this area. This plan intends to cover all operators and participants of wholesale payment systems and messaging networks.  The ECB has affirmed its commitment to ensure the implementation of this strategy.

ECB publishes guide to fit and proper assessments

The ECB has released a guide to clarify how it assesses the suitability of management committees of significant credit institutions that fall under its direct supervision. The guide aims to ensure consistency in the policies, processes, and practices followed by the ECB in relation to its 'fit and proper' oversight functions.

Supervisory Board Chair replies to Dr Schäuble, President of the German Bundestag, on the ECB’s supervisory activities

Daniele Nouy, Chair of the Single Supervisory Board, discussed how Article 21 of the SSM Regulation (Council Regulation (EU) No 1024/2013 of 15 October 2013), which sets out the rules for interactions between the European Central Bank (ECB) and the national parliaments, does not contain a derogation from the professional secrecy requirements applicable to the information received or created in the conduct of the supervisory tasks conferred on the ECB.

Because of this, the response the ECB Banking Supervision may offer to questions posed by national parliaments needs to respect these professional secrecy requirements. However, within the boundaries of the applicable confidentiality rules, Mr. Nouy outlined some considerations that proved useful for a better understanding of the ECB’s supervisory role.

EBA updates Q&A on Single Rulebook on Capital Requirements Regulation

The EBA has updated its Q&A on the Single Rulebook. The Q&A invites questions on Directive 575/ 2013 (the Capital Requirements Directive (CRR)) and publishes responses in order to ensure consistent application of the Single Rulebook framework across the EU's Single Market.

Commission enacts Delegated Regulation under Capital Requirements Directive

The European Commission has passed a Delegated Regulation (EU) 2018/728 intended to supplement the Capital Requirements Directive. The Delegated Regulation sets out regulatory technical standards to govern procedures for deeming transactions involving third-country non-financial counterparties exempt from the own funds requirement under the CRR.

Parliament Vice President Dombrovskis addresses Banking Union and Capital Markets Union

In a speech at the European Parliament, Parliament Vice President Vladis Dombrovskis highlighted the importance of the Banking Union and Capital Markets Union as components of the Economic and Monetary Union. Vice President Dombrovskis said that creating a common backstop for the Single Resolution Fund and a European Deposit Insurance scheme are key steps in completing the Banking Union.

On the other hand, ten legislative proposals concerning the Capital Markets Union are yet to be adopted. These include provision for a new EU license for crowdfunding platforms, common EU rules for covered bonds and measures to facilitate the cross-border distribution of investment funds.

ECB sets out approach to UK banks during Brexit transition period

The ECB clarified its expectations of UK banks that plan on establishing a presence in the EU once the UK has left the Union. The ECB and national supervisory authorities expect to receive incoming banks' authorisation 'as soon as possible' but by the end of Q2 2018 'at the very latest'. While transition periods could be essential for smooth transitioning from the UK to the EU, such transition periods should not be used to delay Brexit planning. However, the ECB may allow banks to extend their transition phases if necessary to meet new regulatory requirements and risk management capabilities.

EBA launches two consultations on economic downturn in IRB modelling

The EBA has launched a consultation on guidelines relating to the estimation of loss given default in situation of economic downturn. Another consultation in relation to draft regulatory technical standards specifying an economic downturn has also been launched.

EBA updates list of O-SIIs in the EU

The list of Other Systemically Important Institutions has been update by the EBA. The list has been changed to reflect the harmonised criteria to assess O-SIIs as provided by the EBA guidelines.

ECB publishes the 2018 Financial Stability Review

The Financial Stability Review was published by the ECB. It details the potential risks to financial stability. The aim of the review is to promote awareness of vulnerabilities and risks to the euro area financial system. The review highlights that risk taking has increased in majority of financial market and bank profitability has improved.

For further information please contact a member of the Financial Regulation team.

Date Published: 8 June 2018