Tracker, Financial Services Regulation & Compliance - Banking


DOMESTIC:

Central Bank of Ireland's Director of Credit Institutions Supervision outlines Brexit plans at Banking & Payments Federation Ireland event
On 3 October 2016, the CBI's Director of Credit Institutions Supervision, Ed Sibley, discussed the CBI's post-Brexit plans at the BPFI's "Brexit Breakfast". Mr. Sibley gave an insight into the CBI's approach to managing the potential relocation and authorisation of many London banks to Ireland. Mr. Sibley noted that the CBI are "… happy to meet and hold discussions with banks that are seriously contemplating and are advanced in their thinking regarding locating banking operations in Ireland". He also noted the need for "significant engagement" between banks and the regulator.

Launch of nationwide Mortgage Arrears Resolution Service
The new Mortgage Arrears Resolution Service, "Abhaile", was launched on 3 October 2016. The initiative is aimed at helping home owners who are in arrears on their mortgage repayments to keep their homes. The system will involve the provision of free financial and legal advice and assistance.

Deputy Governor of the Central Bank of Ireland addresses the Peterson Institute for International Economics on the topic of non-performing loans
On 6 October 2016, the Deputy Governor of the CBI, Sharon Donnery, addressed the Peterson Institute for International Economics on the topic of non-performing loans in the Euro area. Ms. Donnery discussed the macro-financial and micro prudential aspects to non-performing loans before going on to discuss the Irish experience of non-performing loan resolution.

Central Bank of Ireland publishes Research Paper on the relationship between the interconnectivity of banks and leverage
The CBI has published a new research paper by Alessandro Barattieri, Laura Moretti, and Vincenzo Quadrini analysing the strong link between financial interconnectivity and leverage across 32 different countries.  

Ireland offered as the new location for the European Banking Authority
On 25 October, the Government agreed to make a public declaration of interest in offering Ireland as the new location for the EBA. The EBA is currently located in London and Minister for Finance, Michael Noonan, noted in an address to the cabinet that, as a result of Brexit, European authorities such as the EBA will need to consider relocation options. The Government decided to follow Minister Noonan's recommendation to put Ireland forward as a potential location.

Minister of State addresses Banking & Payments Federation of Ireland on the topic of retail banking customers
On 27 October, Minister of State, Eoghan Murphy, delivered a speech at a BPFI conference entitled "Delivering Service for Customers". Mr. Murphy focused on the importance of retail banking consumers to innovation in the financial services sector, firstly discussing the shift in consumer expectations as technology advances. Mr. Murphy went on to outline some domestic and European legislative initiatives before considering some of the ways the Government is reacting to Brexit with a particular focus on increased support for SMEs. 

 

EUROPEAN:

European Banking Authority publishes final Guidelines on implicit support for securitisation transactions
On 3 October, the EBA published final Guidelines on implicit support for securitisation transactions. Under the Capital Requirements Regulation (the CRR) (Regulation No 575/2013) there are certain restrictions on the provision of implicit support to securitisations by institutions. A transaction is not considered to be implicit support where it is carried out at arms' length. These Guidelines published by the EBA set out a test to determine what constitutes an arms' length transaction.

European Banking Authority publishes final Guidelines on corrections to modified duration for debt instruments
The EBA has published its final Guidelines on corrections to modified duration for debt instruments. These Guidelines relate to the CRR and set out how corrections to the calculation of modified duration should be applied to reflect prepayment risk. 

European Banking Authority publishes updated report on the monitoring of Additional Tier 1 instruments
The EBA has published an updated report on the monitoring of AT1 instruments and proposed standardised templates for AT1 instruments. The report was published in accordance with the CRR which requires the EBA to "monitor the quality of own funds instruments issued by institutions across the Union". 

European Banking Authority publishes Consultation Paper on the Guidelines on ICT Risk Assessment under the Supervisory Review and Evaluation Process
The EBA has initiated a consultation on the Guidelines on the assessment of the Information and Communication Technology (ICT) risk under the Supervisory Review and Evaluation Process (SREP). The SREP is dealt with in Section III of the Capital Requirements Directive (CRD) (Directive 2013/36/EU) and these draft Guidelines are intended to add to the previous EBA Guidelines on "common procedures and methodologies" for the SREP.

European Commission publishes Implementing Technical Standards under the Capital Requirements Regulation in the Official Journal
On 12 October, Commission Implementing Regulation ((EU) 2016/1799) was published in the Official Journal of the EU. This Implementing Regulation lays down ITS relating to the mapping of credit assessments of external credit assessment institutions for credit risk under the CRR.
The Commission also published Commission Implementing Regulation ((EU) 2016/1801) in the Official Journal, laying down ITS with regard to the mapping of credit assessments of external credit assessment institutions for securitisation in accordance with the CRR. Both sets of ITS entered into force on 2 November 2016.

European Banking Authority publishes a reminder to national competent authorities of key deadlines for data submissions for the 2017 benchmarking exercise of internal approaches for credit and market risk
The EBA has published a reminder to the national competent authorities of the Member States of the key deadlines for the submission of data to the EBA's 2017 benchmarking exercise of internal approaches for credit and market risk. The key dates are as follows:

  • For market risk, banks must submit initial market calculations to national competent authorities by 4 November 2016 and must submit risk measures data to national competent authorities by 11 April 2017.
     
  • For credit risk, banks must submit low default portfolio figures to national competent authorities by 11 April 2017.

European Banking Authority publishes 2017 Work Programme
The EBA published its Work Programme for 2017, on 12 October. As part of this Work Programme, the EBA has also outlined its plans from 2017 to 2020.  The EBA plans to develop seven strategic areas for 2017 to 2020 as follows: 

  • "To play a central role in the regulation and policy framework with the development and maintenance of the Single Rulebook;
     
  • To promote efficient and coordinated crisis management of credit institutions, investment firms and financial market infrastructures in the EU;
     
  • To promote the convergence of supervisory methodologies and practices to a high standard so as to ensure that regulatory and supervisory rules for going concern and crisis situations are implemented consistently across the EU;
     
  • To identify and analyse trends, potential risks and vulnerabilities stemming from the microprudential level across borders and sectors;
     
  • To maintain and develop the common supervisory reporting framework, as well as to strengthen its role as the EU data hub for the collection, use and dissemination of data on EU banks;
     
  • To protect consumers, monitor financial innovation and contribute to efficient, secure and easy retail payments in the EU;
     
  • To be a competent, responsible and professional organisation, with effective corporate governance and efficient processes."  

European Banking Authority publishes a speech by its chairperson, Andrea Enria, entitled "Financial Markets 2.0 – R (evolution): Rebooting the European banking sector"
The speech, which took place at the 7th FMA Supervisory Conference in Vienna on 5 October 2016, addressed challenges faced by the financial sector following the financial crisis, and in particular the process of repairing bank balance sheets, as well as the challenges posed by new technologies.  

European Banking Authority publishes Guidelines on stress tests of deposit guarantee schemes under the Deposit Guarantee Scheme Directive
The EBA has published Guidelines on stress tests of deposit guarantee schemes under the Deposit Guarantee Scheme Directive (DGSD) (Directive 2014/49/EU). The Guidelines set out the principles and contents of stress tests that deposit guarantee schemes must carry out under the DGSD.

Commission Implementing Regulation establishing the forms referred to in the European Account Preservation Order Regulation published in the Official Journal 
A Commission Implementing Regulation has been published in the Official Journal of the EU setting out the type of forms to be used under Regulation (EU) No 655/2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters (the European Account Preservation Order Regulation).

European Banking Authority publishes draft guidelines on internal governance for credit institutions and investment firms
On 28 October 2016, the EBA published draft guidelines on the governance provisions contained in the CRD, proposing updates to the existing set of guidelines on internal governance and the introduction of additional aspects that aim to foster a sound risk culture. The EBA will finalise the guidelines following the public consultation with the existing guidelines on internal governance, published on 27 September 2011, set to be repealed when the revised guidelines enter into force.

European Commission publishes draft Regulatory Technical Standards under the CRD
The European Commission has published draft RTS supplementing the CRD in relation to benchmarking portfolio assessment standards and assessment sharing procedures for the assessment by competent authorities of the internal approaches adopted by institutions for calculating own funds requirements. The EBA submitted the draft RTS to the Commission following a Consultation in 2014.

European Banking Authority publishes its response to the European Commission's call for advice on the criteria to identify the class of investment firms for which the prudential regime under the CRR and CRD is applicable
On 20 October, the EBA published its response to the Commission's call for advice on the criteria to identify the class of investment firms for which the prudential regime under the CRR and CRD is applicable. As part of this response, the EBA has recommended that only firms identified as Global Systemically Important Institutions (GSIIs) and Other Systemically Important Institutions (OSIIs) should be subject to the full prudential regime.

European Banking Authority publishes Consultation Paper on draft Implementing Technical Standards under the Banking Recovery and Resolution Directive
The EBA has launched a Consultation on draft ITS relating to procedures and templates for the identification and transmission of information by resolution authorities to the EBA, on minimum requirements for own funds and eligible liabilities under the BRRD (Directive 2014/59/EU). The Consultation Paper is seeking responses until 21 November 2016.

European Banking Authority publishes its response to the European Commission's review of the large exposures framework under the CRR
On 24 October, the EBA published its response to the Commission's call for advice on its review of the large exposures framework under the CRR. As part of its response, the EBA has called for "a simplified and more harmonized large exposures regime".

European Banking Authority to hold a public hearing on covered bonds
The EBA has announced that it will be holding a public hearing, on 18 November 2016, to discuss its draft proposals on the European covered bond framework. The deadline for registration for the hearing is 4 November. 

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

Date published: 04 Nov 2016