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Source: Government of the Netherlands

News item | 21-04-2025 | 10:21

The Action Plan is supplementary to the existing Strategic Partnership Agreement for Sustainable Peace and Prosperity agreed upon between the Netherlands and Japan in November 2015. 

Source: European Banking Authority

The European Banking Authority (EBA) today published an updated list of indicators for risk assessment and risk analysis tools, together with the accompanying methodological guide. Without adding any reporting burden on reporting institutions nor on competent authorities, this guidance describes how risk indicators are computed in EBA publications. It will allow competent authorities and users of EBA data to interpret key bank figures in a consistent fashion when conducting their risk assessments and analyses.

This update is based on the EBA reporting framework version 4.0 and covers indicators on institutions’ profitability, solvency and operational risk, among others. The update also includes a new sets of risk indicators laid down in the Banking Package (Capital Requirements Regulation and Capital Requirements Directive – CRR3/CRD6), indicators related to Environmental, Social and Governance (ESG), and those already used in the context of the Minimum Requirement for Own Funds and Eligible Liabilities (MREL).

Source: European Banking Authority

The Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) today published its 2024 Annual Report, which provides an overview of the joint ESAs work completed during the past year.

The ESAs continued to explore and monitor potential emerging risks for financial markets participants and the financial system.

The main areas of cross-sectoral focus in 2024 were joint risk assessments, sustainable finance, operational risk and digital resilience, consumer protection, financial innovation, securitisation, financial conglomerates and the European Single Access Point (ESAP). Among the Joint Committee’s main deliverables were policy products for the implementation of the Digital Operational Resilience Act (DORA) as well as ongoing work related to the Sustainable Finance Disclosure Regulation (SFDR).

Background

In 2024, ESMA chaired the Joint Committee with all three ESAs coordinating discussions and the exchange of information across their institutions, the European Commission and the European Systemic Risk Board (ESRB).

The Joint Committee is a forum with the objective of strengthening cooperation between the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), collectively known as the three European Supervisory Authorities (ESAs).Through the Joint Committee, the three ESAs coordinate their supervisory activities in the scope of their respective responsibilities regularly and closely and ensure consistency in their practices.

Source: European Banking Authority

The European Banking Authority (EBA) today published its Report on Remuneration and Gender Pay Gap Benchmarking for institutions and investment firms. The Report shows a material gender pay gap in 2023 with women earning less than men. Remuneration practices in institutions remained stable between 2021 – 2023, but the ratio between the variable and fixed remuneration in investment firms increased significantly after the introduction of the Investment Firms Directive (IFD).

Alongside its annual Report on Remuneration of identified staff, the EBA is releasing, for the first time, a detailed section on gender pay gap covering all staff as well as those identified as having a material impact on the risk profile of institutions and investment firms.

In 2023, the average ratio between variable and fixed remuneration for identified staff in investment firms stood at 145.85% (2022: 191.42%), higher and less stable compared to the ratio in institutions of 59.59% (2022: 58.62%). Higher bonuses in investment firms are driven by different business models and a more volatile profitability. In 2023, the highest bonuses in institutions were paid in the area of investment banking, whereas in investment firms in the area of dealing on own account, underwriting and placing of instruments, where the average ratio reached 521%. This is a material increase compared to 2021, where for investment firms a 100% limit (200% with shareholders’ approval) for bonuses compared to the fixed remuneration applied. The bonus ratios in other business areas were much lower and remained between 35% and 120%.

On average, female staff in institutions earned 24.48% less in 2023 than their male counterparts. For risk takers (identified staff) the difference was at 21.64%. The pay gap was even more pronounced in investment firms, with female staff earning 32.0% and female identified staff earning 31.74% less than their male colleagues. The pay gap was mainly caused by the underrepresentation of women in higher paid positions. The Report shows the gender pay gap for each quartile of pay level. Women only held 33.45% of the highest paid positions in institutions and just 12.99% of them in investment firms. However, overall, women and men were equally represented in institutions (median representation of women 51.65%) but underrepresented in investment firms (35.43%).

The data underscores the need for entities and competent authorities to analyse closer the reasons for the observed gender pay gap and to address gender pay and gender representation disparities. In this context the EBA is also revising its internal governance Guidelines to further improve the monitoring of gender aspects in institutions and investment firms.

Legal basis and background

The EBA collects remuneration and gender pay gap data from competent authorities for benchmarking under Article 75(1) of Directive 2013/36/EU (CRD) and Article 34(1) of Directive 2019/2034/EU (IFD) and as specified in Guidelines (EBA/GL/2022/06) and (EBA/GL/2022/07), both published on 30/06/2022.

The Capital Requirements Directive (CRD) and the IFD include requirements on the variable remuneration of identified staff, who have a material impact on the banks or investment firms risk profile, or the assets managed by them. Until 2021, investment firms were subject to the same requirements as banks, including a limitation of the variable to fixed remuneration of identified staff to 100% (200% with shareholders’ approval). As of 2022, this requirement, that aims to prevent excessive risk taking, no longer applies to investment firms, that have to set an appropriate ratio for this purpose in their remuneration policies. 

Source: Government of the Netherlands

News item | 10-04-2025 | 14:37

Taking part in Expo 2025 brings opportunities to deepen bilateral relations with Japan. As a reliable partner in East Asia, and the world’s fourth largest economy, Japan is important to the Netherlands. This year marks 425 years of ties between our two countries. These longstanding relations form the basis for strong cooperation in areas such as security, economic resilience, trade, agriculture, food security, defence, cyber protection and innovation.

Minister for Foreign Trade and Development, Reinette Klever: ‘Expo 2025 is a unique opportunity for Dutch companies and knowledge institutions to present their expertise to a large international audience. As a powerhouse of innovation, the business community plays a vital role in addressing global challenges, such as those related to food security and health.’

Potential growth sectors

Over the course of six months, an extensive programme of more than 100 events will give Dutch companies and institutions the opportunity to present themselves and meet Japanese companies. Various theme weeks will focus on potential growth sectors such as food, health, energy and tech, and there will be an ongoing cultural programme with work by Dutch artists and ensembles. Six economic missions will visit from the Netherlands. On the 22nd of April Prime Minister Schoof will officially open the Netherlands pavilion during his visit to Japan.

Common Ground

The Netherlands’ participation is inspired by its unique relationship with water. Our country’s location, partly below sea level, taught us centuries ago to work with each other. Now, as we face new challenges in 2025, cooperation is once again of great importance, this time on an international level. The Netherlands therefore invites Japan and other countries to join it on common ground and work together on solutions.

Pavilion based on circular design concept

The Netherlands pavilion was designed and built by Dutch-Japanese consortium A New Dawn (AND BV), consisting of architecture firm RAU, engineering consultancy DGMR, experience design studio Tellart and Japanese construction company Asanuma. The design consists of a rectangular building with a luminous sphere in the centre, symbolizing a ‘man-made sun’: a clean and endless energy source. On the outside are slats shaped like ocean waves. Together these are exactly 425 metres long, in honour of the 425-year trade relationship with Japan. The pavilion is also an excellent example of circular construction. Records have been kept of exactly what materials have been used, so that nothing goes to waste. After Expo the pavilion will be dismantled and the materials reused.

Interactive visitor experience

When visitors arrive at the pavilion, they are given a small luminous sphere. This reacts to installations at various points in the building, taking them on a journey through the history of the Netherlands and Japan and our battle against water. In the highlight of the show, visitors step into the large sphere in the centre of the pavilion to see an AI film in a 360-degree dome. Before they exit, visitors can share their own ideas and dreams for the future through an interactive artwork.

Dutch innovations

The pavilion revolves around ten impressive Dutch innovations, all harnessing the power of nature. In their own way, each contributes to changing how we generate energy, travel and grow food. Among the innovations being showcased are cultivating fish from cells (Upstream Foods), harnessing ocean waves to generate electricity (Weco) and using self-steering boats for fast and clean transport (Roboat).

Expo 2025 Osaka runs from 13 April to 13 October 2025. Around 160 countries and organisations are participating. The exhibition organisers are expecting more than 28 million visitors.

Source: Government of the Netherlands

News item | 07-04-2025 | 17:00

Targeted screening to preserve openness of science

The new bill identifies the knowledge and technology areas where the risks to our national security are greatest. They include AI, nuclear, quantum, biotechnology, microchips, as well as other technology with potential military applications. The law requires research universities, universities of applied sciences and other research institutes, such as TNO, to examine their operations and activities to pinpoint areas where research takes place with  sensitive knowledge or technology. This involves a customised approach, which recognises that differences occur between the usage of such technologies between institutions. While many knowledge institutions may not engage with such technology, others may use it in specific projects or labs. In future, knowledge institutions will determine this themselves, eliminating unnecessary screening. It is essential to maintain ample space for international collaboration between researchers.

When the law comes commences, any new researcher or Master’s student, regardless of their background, who wishes to work in environments with sensitive knowledge or technology will need to undergo screening. This screening is a form of tailored risk evaluation. The government has asked screening authority Justis to conduct the screenings.  To facilitate this, Justis is performing an implementation test to determine the feasibility and requirements for the new screening process. Ensuring the law can be effectively enforced is a priority for the government. Initial estimates suggest approximately eight thousand screenings will be conducted per year.

Screening is necessary

In recent years, universities and knowledge institutions have implemented numerous measures to safeguard their knowledge. For example, they are more cautious about certain international collaborations and have increased their security measures. Increased security awareness amongst scientific researchers helps on a daily basis in curbing the unwanted transfer of critical knowledge assets from the Netherlands. However, scientific researchers cannot do this on their own. Following the example of neighbouring countries and others worldwide, the Netherlands is now taking the next step: screening researchers. This measure is necessary. Minister of Justice and Security David van Weel is one of the ministers submitting the bill.
 

Van Weel: “Foreign powers are intensifying their efforts to acquire Dutch knowledge and technology. Their aim is to utilise our technological expertise to enhance their weaponry, or use it as a strategic means of power. They seek to achieve this by sending researchers and students here or by pressuring them to share information. Therefore, it is essential that we carefully scrutinise who is granted access to the most sensitive knowledge and technology here in the Netherlands. By doing so, we enhance the resilience of our knowledge institutions against external threats, which is crucial in these turbulent times.“

Law to come into force as soon as possible

The bill is available online for public consultation as of today. This gives everyone the opportunity to voice their opinion, including those who will be involved in the screening process. This input will facilitate further improvement of the bill. Following this, the law will be submitted to the Council of State for advice and then to parliament for debate. The objective is for the law to commence as soon as possible, with mid-2027 as the target, assuming it can be enforced.

Source: European Banking Authority

The European Banking Authority (EBA) published today an updated list of institutions, which have a reporting obligation for the purpose of the 2025 EU supervisory benchmarking exercise. The EBA will be conducting the 2025 benchmarking exercise on a sample of 110 institutions from 16 countries across the EU and the European Economic Area. The EBA runs this exercise leveraging on established data collection procedures and formats of regular supervisory reporting and assists Competent Authorities in assessing the quality of internal approaches used to calculate risk weighted exposure amounts.

Legal Basis

The benchmarking exercises are conducted in accordance with Article 78 of the Capital Requirements Directive (CRD), which mandates the Authority to produce a report to assist the competent authorities in assessing the quality of the internal approaches.

These annual exercises provide a regular supervisory tool based on benchmarks to support competent authorities’ assessments of internal models and produce comparisons with EU peers.

They also increase the convergence of supervisory practices concerning the internal model’s application in the regulatory framework.

Source: European Banking Authority

The European Banking Authority (EBA) today released the findings of its latest Peer Review on the performance of stress tests by deposit guarantee schemes (DGSs) across the European Union. This comprehensive review assessed how seven national DGSs performed stress tests against benchmarks developed for the purposes of this Peer Review. The benchmarks derive from the Deposit Guarantee Schemes Directive (DGSD) and the Revised EBA Guidelines on stress tests of deposit guarantee schemes. Stress tests of DGSs are essential for maintaining financial stability and protecting EU citizens. By rigorously assessing the performance of DGS stress tests, the EBA aims to continuously enhance the preparedness of DGS to handle bank failures and safeguard depositors’ funds. 

​Legal basis and next steps 

Source: European Banking Authority

The European Banking Authority (EBA) today published its 2024 Reports on the annual market and credit risk benchmarking exercises. For the first time, the EBA also released a specific Report on the fundamental review of the trading book Alternative Standardised Approach (FRTB ASA). These 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.

Regarding market risk, the decline in the dispersion in the various risk measure is confirmed for this exercise. For credit risk, the variability of RWAs remained stable compared to the previous year, but for some asset classes a reduction could be observed in the longer run for some asset classes and parameters.

Market Risk

The Market Risk Benchmarking IMA Report presents the results of the 2024 supervisory benchmarking and summarises the conclusions drawn from a hypothetical portfolio exercise (HPE) conducted in 2023/24.

The results confirm that most participating banks have seen a relatively low dispersion in the initial market valuation (IMVs), though slightly higher compared to 2023. However, a decline in the dispersion in risk measures submissions was noticed compared to the previous exercise.

In general, variability has declined constantly through past exercises. This is likely due to better data submissions by the participating banks, as a result of improved instructions, knowledge of the portfolios and the resolution of issues encountered in the previous exercise.

Regarding the single risk measures, the overall variability for value at risk (VaR) is lower than the observed variability for stressed VaR (sVaR) (14% and 21%, compared to 16% and 21% in 2023, and to 21% and 28% in the 2022 exercise). More complex measures, such as the incremental risk charge (IRC), show a higher level of dispersion (44%, it was 42% in 2023 exercise, 45% in the 2022).

The assessment by competent authorities of the over- and underestimation of RWAs was encouraging as the latter were aware of and able to explain the causes of almost all deviations. While most of the causes were identified and actions put in place in order to reduce the unwanted variability of RWAs, the effectiveness of these actions can be evaluated only by competent authorities via constant monitoring of the benchmarking results.

The benchmarking on the FRTB ASA will become even more critical in the future, as it will be extended to banks that apply the ASA methodology independently without the current requirement of having been granted permission to adopt internal models for market risk’s own funds requirements. One positive aspect of the ASA data collection is that the Own Funds Requirements (OFR) computed using this methodology is already significantly more consistent than the IMA methodology. On the other side, the Default Risk Charge (DRC), residual risk add-on (RRAO) and the validation portfolios highlighted some inconsistencies in the data submissions.

 

Credit Risk exercise

The relative share of the Exposure at Default (EAD) subject to the Internal Ratings Based (IRB) method appears slightly decreasing in the medium run but practically constant in the last years.

Furthermore, the share of approved material model changes has increased for all asset classes, indicating that the implementation of the IRB roadmap is progressing.

The Report shows a clear decreasing trend of variability, measured in terms of standard deviation, can be observed for the PD while for the LGD it more difficult to observe a clear trend. The Report also proves that, besides risk factors able to capture the underlying portfolio characteristics, prudential adjustments could potentially explain part of the variability.

A specific analysis regarding the Retail portfolio shows the role that the type and degree of collateralisation can play in explaining the variability of the Loss Given Default (LGD). 

 

Notes to the editors

These annual benchmarking exercises contribute to improving the regulatory framework, increasing convergence of supervisory practices and, thus, restoring confidence in internal models. For credit risk internal models, the EBA has followed its roadmap for the implementation of the regulatory review of internal models.

This exercise should be read in parallel with other efforts to reduce undue level of variability. In particular, the  EBA roadmap to Repair IRB models is a key component of the review of the IRB framework, along with the enhancements brought by the final Basel III framework assessed by the EBA in a set of recommendations as an answer to the call for advice of the European Commission.

The exercises provide a regular supervisory tool based on benchmarks to support competent authorities’ assessments of internal models and produce comparisons with EU peers.

Source: European Banking Authority

The European Banking Authority (EBA) today published two Reports on the market share of subsidiaries of non-EU banks in the EU, as well as on EU banks’ assets and liabilities in foreign currencies. The market share of EU subsidiaries of third country banking groups amounts to 10.17% of total assets as of December 2023, mostly owing to exposures towards credit institutions and other financial corporations in the EU. Of the individual asset categories, the market share of third country players is highest in derivatives while their largest sources of income are fees and commission income and interest income from credit institutions and other financial corporations.

As of December 2023, the market share of third country players was 10.17% of total assets, and accounted for 33.73% in derivatives, 8.17% in loans and 6.06% in debt securities. More than 70% of loans and derivatives were granted to counterparties domiciled outside the home country. The market share of third country players mostly owed to exposures towards credit institutions and other financial corporations in the EU, amounting to 30.79% and 22.44% of total assets of all counterparties, respectively.

As of December 2023, the assets reported by subsidiaries of third country banking groups towards credit institutions and other financial corporations accounted for 78% of total assets. Moreover, 80% of these assets were located outside of the country where the subsidiaries were domiciled.

In relation to the P&L items, the market share of subsidiaries of third country banking groups represented 5.16% of interest income, 1.85% of dividend income, 12.22% of fee and commission income and 32.28% of other operating income. Subsidiaries of third country banking groups enjoyed a high market share on fee income originating from commodities (77.34%), fiduciary transactions (48.74%), central bank administrative services for collective investment (30.57%), corporate finance (30.19%), custody (25.68%) and foreign exchange (19.73%).

Finally, in terms of the assets involved in the services provided, the market share of subsidiaries of third country banking groups is high in central administrative services for collective investment (53.11%), fiduciary transactions (28.87%) and custody assets (20.55%).

The Reports also show that EU/EEA banks hold nearly 30% of their exposures in foreign currencies, while they receive 21% of total funding in foreign currencies (without including foreign subsidiaries of EU banks). Foreign currency funding consists of funding in Euro (4% of total funding), other EEA currencies (1.9% of total funding) and other foreign currencies (14.7% of total funding). The US dollar is the main contributor to funding in other foreign currencies (12% of total funding).

On wholesale funding, EU/EEA banks mainly tap markets of foreign currency funding. Unsecured wholesale funding represents two thirds of total foreign currency funding, followed by repurchase agreements (13% of foreign currency funding). More than half of unsecured wholesale funding in foreign currencies comes from financial customers, while non-financial customers provide less than a third of unsecured wholesale funding in foreign currencies.

On net stable funding ratio (NSFR), EU banks’ buffers remain comfortably above the minimum requirement both for the total NSFR ratio and for the NSFR in the main significant currencies. The average foreign currency NSFR is below 100% only for Norwegian krone and Japanese yen. The average NSFR in USD stood at 107.2% as of December 2023,  higher than the level observed in June 2021 (83%). However, the NSFR in USD remains below 100% for 60 banks out of the 267 banks reporting USD as a significant currency.

Note to the editors

1. The identification of non-EU entities and operators was made based on the country of domicile of the ultimate parent.
2. The EBA relied on different data sources to carry out the analyses included in the Report. The analysis on funding structure and assets and liabilities in foreign currency is based on EBA supervisory reporting data. The investigation of the market share relies mainly on FINREP templates, available at the EBA for banking groups (i.e. institutions that report on a consolidated basis). However, only a limited number of subsidiaries of third country banking groups have established a banking group in the EU and report on a consolidated basis, while the majority of the subsidiaries operate on a solo basis and report FINREP individual templates.