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The EBA clarifies the procedure for the classification of asset referenced tokens and e-money tokens as significant and the transfer of supervisory powers between the EBA and competent authorities

Source: European Banking Authority

The European Banking Authority (EBA) published today a Decision setting out the procedural aspects related to the significance assessment of asset-referenced tokens (ARTs) and e-money tokens (EMTs) and the transfer of supervisory responsibilities, including the establishment of supervisory colleges for significant ARTs (s-ARTs) and significant EMTs (s-EMTs).

The Markets in Crypto Assets Regulation (MiCAR) sets out a new supervisory regime for ART and EMT issuers, which includes significance assessments and reassessments of ARTs and EMTs by the EBA, transfer of supervisory responsibilities from national competent authorities to the EBA and the establishment of supervisory colleges for s-ARTs and s-EMTs. 

In its Decision, the EBA details the following procedural aspects:

  • it introduces a harmonised reporting calendar for national competent authorities and clarifies the respective reference periods and remittance dates.   
  • it clarifies the reporting obligations for issuers of s-ARTs and s-EMTs and the reporting of data relevant for the establishment of the supervisory colleges. 
  • it sets out the procedural arrangements and timeline to be followed for the consultation procedures with related parties when the EBA is to notify its draft and final decisions on significance assessment to the home NCA of the issuer, the issuer, the ECB and the national central bank, where relevant.  
  • it establishes the procedural steps and information required in this respect to support a smooth transition of supervisory competences between the EBA and national competent authorities for issuers of s-ARTs and issuers of s-EMTs.
  • it provides for different templates to facilitate the implementation of the procedure, including a template for national competent authorities’ notification of voluntary classification requests from issuers of ART and EMT and a template for the issuer, the competent authority of the issuer’s home Member State, the ECB and relevant central bank to provide observations and comments in writing to the EBA’s draft decision to classify or to no longer classify an ART or EMT as significant.

Legal basis and background

The EBA Decision EBA/DC/558 was adopted on the basis of Articles 35 and 44 of Regulation (EU) No 1093/2010 (EBA Regulation), and Articles 43, 44, 56, 57, 117, 119 of Regulation (EU) 2023/1114 (MiCAR).

The EBA is responsible for carrying out assessments of ARTs and EMTs in order to identify if they meet the criteria for significance as set out in MiCAR. When classifying an ART or EMT as ‘significant’, the EBA is responsible for carrying out relevant supervisory tasks under MiCAR, including establishing, managing and chairing supervisory colleges. 

The EBA is responsible for conducting direct supervision of issuers of s-ARTs, while s-EMTs (where issued by electronic money institutions) are subject to ‘dual supervision’ by the EBA and the respective home NCA. The EBA will exercise its supervisory powers in close cooperation with any other competent authorities responsible for supervising the respective issuers (in cases where the issuer also carries out other financial services activities). As part of its supervisory activities, the EBA may request information from issuers, conduct investigations, carry out on-site inspections, take supervisory measures and impose fines. 

The EBA is continuously and actively engaging with national competent authorities to ensure it can carry out effectively its supervision mandate under MiCAR.  

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Einstein Telescope in border region step closer

Source: Government of the Netherlands

News item | 18-10-2024 | 12:00

Major steps have been taken to build the Einstein Telescope in the border region of Belgium, the Netherlands and Germany. This was revealed at the 4th ministerial summit on the project. The Flemish government is already reserving €200 million for the project. In addition, Belgium and the Netherlands support the steps being taken in Germany to definitively earmark funds for the construction of the Einstein Telescope. Finally, it was announced at the summit that the 1rst results of the drilling campaign give the preliminary conclusion that the subsoil in the border area of Belgium, the Netherlands and Germany is sufficiently stable and offers opportunities to build the telescope.

Newcomers

That news caused great optimism among the responsible ministers from North Rhine-Westphalia, Belgium and the Netherlands at the Kerkrade conference on the underground telescope.

Following elections and government formation in the Netherlands and Belgium, a number of new ministers in the Netherlands and Belgium are responsible for the Einstein Telescope project. From Wallonia it is Minister Pierre-Yves Jeholet, in Flanders it is Prime Minister Matthias Diependaele and from the Netherlands Minister Eppo Bruins, who also hosted.

Commitment in the 3 countries

Ahead of the summit, it was announced that the new Flemish cabinet is already reserving €200 million for the Einstein Telescope. This is good news. Together with the financial reservation in the Netherlands and the extra boost given by Minister Bruins on Prinsjesdag, a total of more than a billion euros is available for the Einstein Telescope in both countries.
Germany is also taking steps for the Einstein Telescope. There, an application is under way to get the Einstein Telescope on Germany’s priority list for large scientific infrastructure. This is a necessary condition for a financial contribution. Dutch and Belgian ministers have indicated their support for this proposal.

Drilling campaign: hard rock favourable

A key condition for building the Einstein Telescope is that the soil is suitable for it. To determine that, drilling to an average depth of 300 metres was carried out at 11 locations in the border region of Belgium, the Netherlands and Germany. Not all analyses have been completed yet, but the first preliminary conclusions look good. It was found that the subsurface consists of harder rock layers than initially assumed. This is favourable for building an underground research infrastructure. The analysed data from the drillings have been independently verified by the geological service of TNO (Netherlands Organisation for Applied Scientific Research). TNO concurs with the research team’s conclusion based on these initial findings that there are no factors that would make the project unfeasible.
This drilling campaign and the data collected do not yet say anything about exactly where the 3 vertices for the underground telescope will be. Further geological research is needed for that. In addition, seismic surveys must show that the area is sufficiently noise-free to allow the telescope to measure gravity waves optimally. Furthermore, civil engineering studies must show how the construction of the underground tunnels and vertices is possible. In addition, environmental impact studies will help determine the most suitable location.

Einstein Telescope of great value

The Einstein Telescope will be of great value to science, the economy and society. Studies show that every euro invested will pay for itself twice over, and thousands of additional jobs are expected to be created in the border area of the 3 countries. Both for scientists and professionals in the fields of construction, maintenance and hospitality.
The decision on where to build the Einstein Telescope will be made in 2026. The border region of Germany, the Netherlands and Belgium is in the race together, working on the best possible bid book. The Netherlands has €58 million for preparation and a reservation of €870 million for construction.

Quotes from national and regional ministers

Minister Eppo Bruins (OCW) – the Netherlands: ‘Together, we are really another step closer to the Einstein Telescope. The Flemish investment is very good news, and Germany is also taking steps. These agreements and first results of the ground borings mean that the ground under our plan is getting firmer, both literally and figuratively. And that’s good news. Together, we can really give a major boost to science, society and the economy in our countries with the Einstein Telescope.’

State Secretary Thomas Dermine, Belgium: ‘This latest ministerial meeting shows that the Netherlands, Belgium, and Germany continue to make significant daily efforts to ensure that the candidacy of the EMR region for the Einstein Telescope is as solid and coherent as possible. The Belgian federal government, whose administration (BELSPO) coordinates the work of the Belgian Task Force, closely monitors the next steps to be taken to ensure that this high-value scientific project is actually realized in the EMR region. The realization of a European project of this caliber will enhance the EMR cross-border region and demonstrate that Europe is at the top of scientific technology in the field of gravitational wave detection.’

Nathanael Liminski, Minister of Federal, European, International Affairs and Media of the State of North Rhine-Westphalia and Head of the State Chancellery: ‘We are constantly fostering cross-border cooperation between North Rhine-Westphalia, the Netherlands and Belgium for the benefit of the people in the region. Of the many areas and projects in which we work together, the Einstein Telescope stands out in particular. Joint cutting-edge research projects send out the signal that we, as Europe, have the confidence to be among the best in the world. The Einstein Telescope has enormous potential, both scientifically and economically.’

Gonça Türkeli-Dehnert, State Secretary, Ministry of Culture and Research of the State of North-Rhine Westphalia: ‘The research landscape in North Rhine-Westphalia, with its many excellent universities and research institutions, is unique in Europe. I am sure that North Rhine-Westphalia and its partners in the Netherlands and Belgium will be the ideal home for the Einstein Telescope.’

Minister Pierre-Yves Jeholet, Wallonia: ‘This project is of great importance for scientific research and European scientific collaboration, but also for the economy of our regions, which is why the new Walloon Government fully supports this bid through the Economy and Industry Department. Most of this project will be carried out under Walloon soil, and the spin-offs will be significant for our regions. In the coming weeks, the Walloon Government will be expanding its project team to maximise the chances of this joint bid by Germany, the Netherlands, Flanders and Wallonia.’

Flemish Prime Minister Matthias Diependaele: ‘The Einstein Telescope is a unique ‘Big Science’ project. It links fundamental science, technological innovation, attraction of STEM fields and international appeal. A strong commitment from all governments involved will enable us to actually bring this unique scientific infrastructure to the Meuse-Rhine Euroregion. This is why the new Flemish government has already entered an initial reservation of 200 million euros in its budget.’

Deputy Stephan Satijn (Economy, Finance and Business, Public affairs) Province of Limburg (NL): ‘During the ministerial meeting, it became clear that we all want the same thing: to bring the Einstein Telescope to this region. The new ministers are also keeping the Einstein Telescope high on the agenda. With good agreements, we have taken another step forward.’

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The European Supervisory Authorities share highlights from the 2024 Joint Consumer Protection Day in Budapest

Source: European Banking Authority

On 3 October , the three European Supervisory Authorities (ESAs) – the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) – organised the 11th edition of their annual Consumer Protection Day, in Budapest.

The event followed the theme of “Empowering EU consumers: fair access to the future of financial services” and had three panels covering the topics of artificial intelligence (AI) in financial services, access to consumer centric products and services, and sustainable finance. Speakers and panellists included leaders from consumer organisations, regulatory authorities, EU institutions, academia, and market participants from across the European Union, with 300 participants on-site and more than 600 viewers online.

Speeches were delivered by the three ESAs Chairs – Verena Ross (ESMA and currently Joint Committee Chair), Jose-Manuel Campa (EBA), and Petra Hielkema (EIOPA) – as well as Csaba Kandrács, Deputy Governor of the Central Bank of Hungary and Agustín Reyna, the Director General of the European Consumer Organisation (BEUC). A fire-side chat also took place with Chris Betz, Chief Information Security Officer of Amazon Web services to discuss generative AI.

On Artificial Intelligence, panellists exchanged views about the potential benefits of AI, such as fraud detection and the automation of processes to detect and prevent money laundering, as well as the risks, such as the lack of transparency and explainability. Panellists emphasised the need to better understand the technology to assess how those risks can be mitigated. Some panellists highlighted the importance for the ESAs to facilitate knowledge sharing, ensure regulatory and supervisory convergence and create the conditions for innovation to grow. Some industry players also called on the ESAs to issue ‘guardrails’ or other guidance on how financial institutions should comply with the new EU AI Act.

During the panel on access to consumer centric financial products and services, panellists discussed the need to strengthen  financial education, pay greater attention to vulnerable consumers, and enable them to understand and access standard financial services packages (payment account, saving account, home/health insurance). The importance of better understanding consumer needs and preserve consumer trust was also highlighted.

On sustainable finance, panellists remarked that investors still struggle to understand the technicalities of  product disclosures and the complex terminology attached to such disclosures. Simplification of the current Sustainable Finance Disclosures Requirements towards a categorisation system that works for retail investors was considered by the panellists to be the main area that regulators should focus on,  in addition to enhancing the financial literacy of retail investors.

The ESAs will reflect on the input and suggestions heard from the audience and the panellists, and discuss the actions to be strenghtened  or to be taken going forward.

See the EBA webpage and the recording of the event here. 

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The EBA’s Banking Stakeholder Group elects its new Chair and Vice-Chairs

Source: European Banking Authority

The Banking Stakeholder Group (BSG) of the European Banking Authority (EBA) elected Christian Stiefmueller as new Chair during its meeting on 15 October 2024. Mr Stiefmueller, who represents consumers, will be supported by two Vice-Chairs, Julia Strau, and Edgar Loew, representing the financial institutions, and the independent top-ranking academics, respectively. Their mandates run for two years.

Legal basis and background

The BSG is set up according to Article 37 of the EBA Founding Regulation, to help facilitate dialogue and consultation with stakeholders on the work of the EBA.

The BSG is composed of 30 members who serve for a period of four years with the possibility to be renewed for an additional term.

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ESAs respond to the European Commission’s rejection of the technical standards on registers of information under the Digital Operational Resilience Act and call for swift adoption

Source: European Banking Authority

The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today issued an Opinion on the European Commission’s (EC) rejection of the draft Implementing Technical Standards (ITS) on the registers of information under the Digital Operational Resilience Act (DORA). The ESAs raise concerns over the impacts and practicalities of the proposed EC changes to the draft ITS on the registers of information in relation to financial entities’ contractual arrangements with ICT third-party service providers.   

The draft ITS proposed by the ESAs were rejected by the EC on the grounds that it is necessary to allow financial entities the choice of identifying their ICT third-party service providers registered in the EU either by using the Legal Entity Identifier (LEI) or by using the European Unique Identifier (EUID). 

In the ESAs view, the EC’s proposal of adding an additional identifier, allowing EU-based companies to use the EUID, will cause unnecessary complexity and could have negative impacts on the implementation of DORA by financial entities, competent authorities and the ESAs. 

The ESAs note that, although the EUID is available free of charge to EU-registered companies, its introduction in the registers of information would entail unforeseen implementation and maintenance efforts for the financial entities. In particular, it would limit the access to and  the possibility for verification of the information by the financial entities and competent authorities. This would lead to a potential increase in the overall reporting burden for financial entities in the context of DORA. In addition, the coexistence of two identifiers could bring additional complexity that would negatively impact the quality of data used, and risk delays in the designation of critical ICT third-party service providers (CTPPs) by the ESAs.

If the EC decides to proceed with the introduction of the EUID, despite the above concerns, additional changes to the draft ITS will be necessary. The Opinion indicates how the draft ITS should be adapted further to cater for the use of the EUID. Without these changes, the ITS could not be practically applied for a proper identification of the ICT third-party service providers, which would negatively impact the designation of CTPPs. The ESAs also note that in the case of co-existence of both LEI and EUID, the financial entities should be given the preference for using LEI, especially where both identifiers are available to them, and for the case of groups, it is important to ensure homogeneity in the registered identification codes for all ICT third-party service providers.

The ESAs call for the final decision on the use of identifiers and the swift adoption of the draft ITS by the EC. This is particularly relevant for the ESAs, who will be designating CTPPs in 2025. Finally, leveraging on the experience of the dry run exercise, the ESAs call financial entities to increase their implementation efforts in order to be ready to submit their registers of information to the competent authorities in the first half of 2025.

Background and legal basis

Article 28(9) of DORA (Regulation (EU) 2022/2554) mandates the ESAs to develop draft ITS to establish the standard templates for the register of information referred to in Article 28(3) of DORA. The draft ITS was developed and submitted by the ESAs to the EU Commission on 17 January 2024.

The registers of information maintained by the financial entities serve as an important input for the ESAs’ work on the designation of CTPPs that will be subject to the oversight by the ESAs.

On 3 September 2024, the European Commission, acting in accordance with the procedure set out in the fourth subparagraph of Article 15(1) of the ESAs Regulations, notified the ESAs of the rejection of the ITS on the basis of the envisaged mandatory use of the LEI to identify ICT third-party service providers under Article 3(5) and (6) of the draft ITS.

Pursuant to Article 15(4) of the ESAs Regulation, the ESAs prepared this Opinion on the proposed amendments to the draft ITS by the EU Commission. In addition, the ESAs also suggested some other changes to the draft ITS based on the experience and feedback received from the industry during  the ‘dry run’ exercise the ESAs carried out during 2024 to support the industry in the preparation for submission of the registers of information and to test the reporting process. 

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Netherlands Pavilion at Expo 2025 Osaka Reveals First Round of Gold Sponsors　

Source: Government of the Netherlands

News item | 15-10-2024 | 10:27

AkzoNobel and Randstad partner up on “Common Ground” in Japan-Netherlands Business  Cooperation.

The Kingdom of the Netherlands has announced that AkzoNobel and Randstad will become Gold Sponsors for the Netherlands Pavilion at Expo 2025 Osaka Japan. The announcement was made during an event held at the Embassy of the Kingdom of the Netherlands in Tokyo, Japan on October 4, 2024. Hiroaki Takahashi, Country sales manager of Automotive and Specialty Coatings at AkzoNobel Japan, and Jos Schut, CHRO Randstad, were invited there on behalf of Marc Kuipers, Commissioner General for the Netherlands at Expo 2025 Osaka. At the Embassy, Aino Jansen, Project Director Expo 2025 Osaka, shared the pavilion’s vision, program, and an overview of sponsorship packages. At the same event, Philips was also announced as a Silver Sponsor for the Netherlands Pavilion.

Enlarge image

The Netherlands is very proud to participate in the Expo 2025 Osaka Kansai Japan, to be held from 13 April to 13 October 2025. With its participation theme “Common Ground,” The Netherlands aims to showcase Dutch innovative solutions in areas such as the energy transition. During Expo 2025, the pavilion intends to provide “Common Ground”: a meeting place for businesses, knowledge institutions, governments and (cultural) organizations to bring together different perspectives and expertise in order to find collective solutions to global challenges.

Marc Kuipers, Commissioner General for the Netherlands at Expo 2025 Osaka

“I am delighted to announce our partners, including two Gold Sponsors, for the Osaka-Kansai Expo 2025. These partnerships represent a crucial step in deepening business and cultural ties between the Netherlands and Japan,” says Mr. Kuipers, “Together with AkzoNobel, Randstad, and Philips, we are excited to work under the theme of ‘Common Ground’, advancing our shared vision and collaboration towards a sustainable future.”

Kaj van Alem, President of AkzoNobel Japan and Global Director for AkzoNobel’s Wood Coatings business

“AkzoNobel is excited to be involved in this incredible initiative at the Osaka World Expo as part of our commitment to a better future. The event will be a tremendous global stage that represents a perfect opportunity for AkzoNobel in Japan, to showcase its extensive portfolio of sustainability-driven innovative solutions.”

Kajetan Slonina, Chairman and CEO, Randstad K.K. / Chief Executive, APAC, Randstad Jos Schut, CHRO, Randstad K.K.& APAC, Randstad

“We are pleased for Randstad to be able to participate in the EXPO 2025 Netherlands Pavilion as a supporting company. Randstad originated in the Netherlands, the country which influenced the way we work. At Randstad we aim to be the world’s most equitable and specialized talent company. We are committed to actively contributing to the creation of a sustainable and better future. We contribute to global society’s needs by promoting fair labor markets, realizing fairness in the workplace, and through the green transition. The Common Ground concept advocated by the Netherlands Pavilion is a vision and a shared mission. We are aligned with this vision, aiming to create a society where everyone can find meaningful and rewarding work, develop the skills they need, and work with vitality as their true selves. We eagerly anticipate the opportunity to meet you on Common Ground and embark on this journey together.”

Sponsorships

The Netherlands Pavilion is still accepting applications from companies and organizations interested in becoming sponsors, as well as organizing events in the event space within the pavilion.

Event space at the Netherlands pavilion available for rent

The event space within the Netherlands Pavilion will be available for external organizations to rent during the Expo.

Details regarding the sponsor packages and event space rental can be found here: https://nlexpo2025.nl/en/organize-event

For more information of the Netherlands participation and the Road2Osaka at Expo 2025 Osaka, Kansai, visit www.nlexpo2025.nl | www.orandaexpo2025.nl

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EBA consults on draft technical standards to support the centralised EBA Pillar 3 data hub

Source: European Banking Authority

  • The consultation paper defines the IT solutions and processes that large and other institutions shall follow to publish Pillar 3 information centrally in the EBA data hub.
  • The proposed IT solutions leverage the EBA’s past and ongoing work and infrastructures  in the area of disclosures and reporting.
  • The Pillar 3 data hub will centralise on the EBA website the Pillar 3 disclosures of all EU institutions, thus allowing users to download data and visualize the Pillar 3 information in a standardised format.

The European Banking Authority (EBA) launched today a consultation on the Pillar 3 data hub, which will centralise prudential disclosures by institutions through a single electronic access point on the EBA website. This project is part of the Banking Package laid down in the Capital Requirements Regulation (CRR3) and Capital Requirements Directive (CRD6). This consultation runs until 11 November.

The draft Implementing Technical Standards (ITS) present the IT solutions and processes to be followed by large and other institutions when submitting their respective Pillar 3 disclosures. This includes the IT solutions to be used, the data exchange formats to be considered, the technical validations to be performed by the EBA.

The EBA welcomes feedback both from institutions and users of Pillar 3 information.

The current proposals in the consultation paper consider the feedback received from the industry on the discussion paper published in December 2023. The summary of this feedback and respective EBA analysis is included in the consultation paper.

In parallel, the EBA continues to run a pilot exercise with voluntary institutions to test the process for large and other institutions. Conclusions from the pilot exercise, together with the feedback received during this consultation, will be taken into account when finalising the draft ITS to be submitted to the European Commission for adoption.

Consultation process

Comments to this consultation paper can be sent to the EBA by clicking on the “send your comments” button on the consultation page. Please note that the deadline for the submission of comments is 11 November 2024. All contributions received will be published following the end of the consultation, unless requested otherwise.

A public hearing will be organised in the form of a webinar on 21 October from 15:00 to 16:30 CET. Please register for the hearing here by 17 October 13:00 CET.

Legal basis, backgrounds d next steps

The new Banking Package (CRR3/CRD6), which will implement the latest Basel III reforms in the EU, includes a mandate to the EBA to develop a Pillar 3 data hub. The EBA’s plan on how to implement the mandates included in the banking package is explained in the ‘EBA Roadmap on strengthening the prudential framework’, published in December 2023.

The CRR3 (Articles 434 and 434a) mandates the EBA to publish on its website all the prudential disclosures for all institutions subject to these disclosure requirements, making it readily available in a centralised manner to all the relevant stakeholders through a single electronic access point on its website. To comply with this mandate the EBA is building a data hub putting together all the disclosures required under Part Eight of the CRR.

The CRD6 (Article 106) mandates the EBA to issue guidelines, in accordance with Article 16 of Regulation (EU) No 1093/2010, to specify the requirements set out in paragraph 1 under which Competent Authorities are empowered to require disclosures more frequently than required under CRR3, set deadlines to institutions to submit the information to EBA and require institutions to use specific media and locations for publication, other than the EBA website for centralised disclosures.

The draft ITS for small and non-complex institutions and on the resubmission policy will be consulted separately, at a later stage.

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The EBA publishes Guidelines on redemption plans under the Markets in Crypto-Assets Regulation

Source: European Banking Authority

The European Banking Authority (EBA) today published its final Guidelines on the orderly redemption of token holders in case of crisis of the issuer. The Guidelines, which are addressed to competent authorities designated under the Markets in Crypto-Assets Regulation (MiCAR), cover issuers of asset-referenced tokens (ARTs) and of e-money tokens (EMTs).

The Guidelines specify the content of the redemption plan to be developed by issuers of ARTs and EMTs in going concern, including the liquidation strategies of the reserve of assets, the mapping of critical activities, the content of the redemption claims, the main steps of the redemption process, and the elements that may lead to the trigger of the plan by the competent authority.

Considering the feedback received during the public consultation, a few targeted amendments have been made to streamline the wording and provide further clarity on some specific aspects. For instance, some clarifications allow for flexibility so that the guidance addressed to issuers of ARTs relating to the liquidation of the reserve of assets can be used, to some extent, also by issuers of EMTs.

Legal basis and next steps

The Guidelines on redemption plans have been developed according to Article 47(5) of MiCAR. By virtue of the cross-reference set out in Article 55 MiCAR, the Guidelines also cover issuers of e-money tokens, as applicable. 

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Joint Committee of the ESAs to focus on digital resilience and sustainability disclosures in 2025

Source: European Banking Authority

The Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published today its Work Programme for 2025, placing particular emphasis on ongoing collaboration to tackle cross-sectoral risks, promoting sustainability in the EU financial system and strengthening financial entities’ digital resilience.

More specifically, in addition to fostering regulatory consistency, adequate risk assessment, financial stability as well as the protection of consumers and investors, the ESAs will undertake joint work in 2025 to:

  • provide further guidance on sustainability disclosures,
  • make progress on financial entities’ digital operational resilience by, among others, launching the oversight of critical information and communication technology (ICT) third-party providers and implementing the major ICT-related incident coordination framework, in accordance with the Digital Operational Resilience Act (DORA),
  • monitor financial conglomerates,
  • promote coordination and cooperation among national innovation facilitators with a view to facilitating the scaling up of innovative solutions in the financial sector, and
  • address other cross-sectoral matters such as retail financial services, investment products and securitization.

Notes

The Joint Committee is a forum with the objective of strengthening cooperation between the three ESAs, where they coordinate their supervisory activities in the scope of their respective responsibilities regularly and closely and ensure consistency in their practices.

In particular, the Joint Committee works in the areas of micro-prudential analyses of cross-sectoral developments, risks and vulnerabilities for financial stability, retail financial services and consumer and investor protection issues and retail investment products, cybersecurity, financial conglomerates, accounting and auditing. More information about the Joint Committee is available here.

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Further Tier 1 capital needs for the full implementation of the EU specific Basel III reform are minimal, the EBA Report finds

Source: European Banking Authority

The European Banking Authority (EBA) today published its third mandatory Basel III monitoring Report which assesses the impact that the EU implementation of the Basel III framework will have on EU banks at the full implementation date, i.e. 2033. The additional impact considers the application of all EU requirements, as reflected in the Capital Requirements Regulation (CRR3), i.e. Pillar 2 requirements, and all EU specific capital buffers. In terms of minimum required capital, the impact has further decreased in relation to the previous reference date of December 2022. The impact is minimal in terms of estimated Tier 1 capital shortfall, while the total capital shortfall is estimated at EUR 5.1 billion.

For the EU banking sector as a whole, the capital that needs to comply with the Basel III reform amounts to EUR 0.9 billion of Tier 1 capital. This means that the additional capital needed can easily be raised over the remaining period until full implementation.  For the purpose of comparison, the Annex to the Report shows the impact of the baseline Basel III proposals, i.e. prior to the implementation of the EU adjustments, or the adaptation of specific discretions, that are part of the revised CRR3.

Overview of the results

Overall, the results of the mandatory Basel III monitoring exercise show that European banks’ minimum Tier 1 capital requirement would increase by 7.8% at the full implementation date in 2033.  The main contributing factors are the output floor and operational risk.  The overall minimum Tier 1 capital requirement for large and internationally active banks (Group 1) would increase by 8.6%. The requirements for the global systemically important institutions (G-SIIs, subset of Group 1) and for Group 2 banks would increase by 12.2% and 3.6%, respectively.

Note to the editors

  • The Report assesses the impact of the EU specific implementation (CRR3) on EU banks of the final revisions to the frameworks of credit risk (split into four sub-categories), operational risk and the leverage ratio. In addition, the introduction of the aggregate output floor is considered. The Report further quantifies the impact of the implementation of the new standards for market risk (FRTB) and credit valuation adjustments (CVA).
  • The Report shows the results of the EU specific implementation separately for Group 1 and Group 2 banks. Group 1 banks are those with Tier 1 capital more than EUR 3 billion, and they are internationally active. All other banks are categorised as Group 2 banks.
  • The Report shows the results of the EU specific implementation separately for three broad business models: ‘universal’, which is a business model offering most of the banking services, ‘retail-oriented’, which focuses on retail clientele, and ‘corporate-oriented and other’, which incorporates the remaining institutions.
  • An interactive tool showing the main results is made available for analytical purposes. The official figures and conclusions are the ones presented in Report. Therefore, any interpretation based on the data provided within the visualisation tool must be done with caution.
  • The Annex to the Basel III monitoring Report shows the impact of the implementation of the baseline Basel III framework prior to the inclusion of additional features that are included in the CRR3/CRD6 and EU adaptation of Basel III discretions.
  • The drop in the impact expressed in Tier 1 minimum required capital is mainly attributed to the fact that G-SIIs already implemented in 2023 the additional leverage ratio requirement of 50% of G-SIIs surcharge atop the 3% minimum required capital of the leverage ratio exposure measure. This led to an increased requirement for the current implementation, resulting in a reduced impact when compared with the full implementation capital requirements, which remained stable for the leverage ratio. This is reflected in the reduced impact of G-SIIs with spillover effects to Group 1 banks and all banks, of which G-SIIs are a subset. On the other hand, the impact on Group 2 was not affected by this implementation.
  • The impact shown in the point-in-time analysis of the third mandatory Basel III monitoring Report is not directly comparable to the previous mandatory exercises. Thus, when comparing the results over time, Table 5 of the Basel III Monitoring Report should be considered.