MIL Publishing Engine 1

Source: European Banking Authority

The European Banking Authority (EBA) today published an Opinion on the amendments proposed by the European Commission to the EBA final draft Implementing Technical Standards (ITS) on public disclosures by institutions and supervisory reporting under the revised Capital Requirements Regulation (CRR3). The EBA acknowledges that the Commission’s proposal provides some flexibility compared to the current version of the ITS and accepts it as an intermediate step. The Commission and the EBA will continue to work together to better articulate and further operationalise these ITS.

In the final package submitted by the EBA to the Commission this year, only the main body of the ITS on public disclosures and on supervisory reporting were meant to published in the EU Official Journal, while the templates and instructions were supposed to be accessible through the EBA website. The Commission proposed to re-include the templates in the normative package to be published in the Official Journal.

In the Opinion, the EBA acknowledges that the changes proposed by the Commission still maintain some of the flexibility originally envisaged and agreed on under the CRR3 mandates for the ITS. The EBA also notes that the original approach to keep both templates and instructions on the EBA website only, would be a preferred one, as it provides more flexibility in the development of such IT solutions.

The EBA accepts the European Commission’s proposal, although it considers it as an intermediate step on the basis of which both the EBA and the European Commission will continue to work together to better articulate and further operationalise the ITS in accordance with the mandates under the CRR3.

Legal basis and background

This Opinion is based on Article 15(1), fourth subparagraph, of Regulation (EU) No 1093/2010 (‘EBA Regulation’), which requires the Authority to submit its response in the form of an opinion to amendments proposed by the European Commission.

On 20 June 2024, the EBA submitted to the European Commission, for adoption, the draft ITS on pillar 3 disclosures. On 5 July 2024, the EBA submitted to the European Commission, for adoption, the final draft ITS on supervisory reporting.

On 7 and 28 October 2024, the European Commission informed the EBA of its intention to endorse the draft ITSs with amendments and submitted a modified version of the ITSs.

Source: European Banking Authority

The European Banking Authority (EBA)  today published two sets of final Guidelines that, for the first time, set common EU standards on the governance arrangements and the policies, procedures and controls financial institutions should have in place to be able to comply with Union and national restrictive measures.

Weaknesses in internal policies, procedures and controls expose financial institutions to legal, reputational risks, and undermine the effectiveness of the EU’s restrictive measures regimes, leading to potential circumvention and affect the stability and integrity of the EU’s financial system.

The first set of Guidelines is addressed to all institutions within the EBA’s supervisory remit. They include provisions that are necessary to ensure that financial institutions’ governance and risk management systems are sound and sufficient to address the risk that they might breach or evade restrictive measures.

The second set of Guidelines is specific to payment service providers (PSPs) and crypto-asset service providers (CASPs) and specify what PSPs and CASPs should do to be able to comply with restrictive measures when performing transfers of funds or crypto-assets.

Legal basis and Background

In July 2021, the European Commission issued a legislative package with four proposals to reform the EU’s legal and institutional anti-money laundering and countering the financing of terrorism (AML/CFT) framework. The legislative package included a proposal for a new Regulation (EU) on information accompanying transfers of funds and certain crypto-assets. This Regulation (EU) 2023/1113 was adopted on 9 June 2023 and applies from 30 December 2024.

Article 23 of this Regulation requires the EBA to issue guidelines on internal policies, procedures and controls to ensure the implementation of Union and national restrictive measures when performing transfers of funds and crypto-assets under this Regulation.

The EBA complements the Guidelines under Regulation (EU) 2023/1113 with own-initiative Guidelines to address wider internal controls and risk management issues, based on Articles 74 of Directive 2013/36/EU, 11(4) of Directive (EU) 2015/2366 and 3(1) of Directive (EC) 2009/110/EC.  These Guidelines clarify how restrictive measures policies and procedures interact with financial institutions’ wider governance and risk management frameworks, to avoid operational and legal risks for financial institutions and ensure an effective implementation of restrictive measures.

The deadline for competent authorities to report whether they comply with the Guidelines will be two months after the publication of the translations into the official EU languages. The amending Guidelines will apply from 30 December 2025.

Source: European Banking Authority

The European Banking Authority (EBA) today released an updated list of third-country groups (TCGs) and third-country branches (TCBs) operating across the European Union and European Economic Area (EU/EEA). This annual publication enhances market transparency by providing stakeholders with clear information on the ownership structures of institutions operating within the EU/EEA under foreign control.

The 2024 update identifies 439 third country groups from 50 countries outside the EU/EEA that are currently active in the area. Among these, 8 groups have established intermediate EU parent undertakings (IPUs), as required by EU regulations, with 2 groups having dual IPUs. Additionally, 61 TCGs have branches in the EU/EEA, resulting in a total of 95 third country branches spread across EU/EEA.

This Report is part of the EBA’s efforts to ensure that market participants have clarity regarding the direct ownership and presence of foreign institutions within the EU/EEA, contributing to a stable and transparent banking environment.

Legal basis and background

• According to Article 21b of Directive 2013/36/EU (Capital Requirements Directive – CRD), third country groups (TCGs) operating through ​more than one institution in the Union and with total assets of EUR 40 billion or more are required to have an intermediate EU parent undertaking (IPU).
• The EBA has a key role to play in facilitating cooperation between National Competent Authorities and in supporting their IPU decision-making process.
• In July 2021, the EBA Guidelines (EBA/GL/2021/08) provided a common methodology for the calculation of the total value of assets in order to achieve consistent application of Union law.
• In May 2022, the EBA published the decision (EBA/DC/441) on supervisory reporting for the threshold monitoring of the intermediate EU parent undertaking to ensure a timely application of the IPU requirement.

Source: Government of the Netherlands

News item | 12-11-2024 | 16:00

NATO Summit 2025 Logo

The logo designed for this Summit reflects the strength of cooperation within NATO, and its adaptability in times of flux. We have chosen a logo where the stylised blades of a wind turbine, combined with the Dutch coastline, visually represent movement. The logo will be used in communications about the Summit and will be on display in The Hague before and during the event.

Major logistical operation

Organising the NATO Summit is one of the biggest logistical operations to be conducted in the Netherlands in decades. It involves a large number of government organisations, including several ministries, Rijkswaterstaat, the municipality of The Hague, the police and Schiphol Airport. In the run-up to the summit, the Ministries of Foreign Affairs and Defence will support a number of events aimed at raising public awareness about the issues to be discussed at the summit.

NATO allies

At the previous summit, in Vilnius, Lithuania, NATO allies asked the Netherlands to organise the 2025 event. This is the first time since NATO’s founding in 1949 that the Netherlands is hosting a NATO Summit. NATO is committed to the principle that an attack on one is an attack on all. We support and protect each other on the basis of that principle.

Source: European Banking Authority

The European Banking Authority (EBA) today launched a consultation on its draft Guidelines that will specify proportionate retail diversification methods to be eligible for the preferential risk weight under the standardised approach for credit risk. The Consultation paper follows the recommendations from the EBA Advisory Committee on Proportionality for 2024 in the credit risk area The consultation runs until 12 February 2025.

In its draft Guidelines the EBA is setting out criteria to assess under which circumstances, retail exposures can be considered as diversified under the credit risk standardised approach for determining capital requirements in the Capital Requirements Regulation (CRR). The requirement to have a diversified portfolio, (i.e. that a portfolio consists of a significant number of exposures with similar characteristics) ensures that the risks credit institutions will have to bear for such exposures are reduced. In addition, the requirement to be diversified is mandatory for retail exposures to be assigned the preferential retail risk weight under the Standardised Approach for credit risk.

As a starting point, the EBA is considering the 0.2% granularity criterion set out in the Basel framework, according to which no individual exposure in the retail portfolio should exceed 0.2% of the retail portfolio. Under the EBA’s proposal, institutions with exposures above the 0.2% granularity criterion will, however, still be considered sufficiently diversified, as long as no more than 10% of their retail portfolio exceeds the 0.2% threshold. This adjustment ensures a proportionate and harmonised approach, which takes into account the significant number of smaller institutions in EU. In addition, the approach taken is simple, which allows the calculation to be done by all institutions and is thereby proportionate to the size of institutions and their retail portfolios. 

Consultation process

Comments to the consultation paper can be sent by clicking on the “send your comments” button on the EBA’s consultation page. The deadline for the submission of comments is 12 February 2025.

The EBA will hold a virtual public hearing on this consultation paper on Monday 16 December 2024, from 15:00 to 16:00 CET. The EBA invites interested stakeholders to register using this link by Thursday 12 December 2024 at 16:00 CET. The dial-in details will be communicated to those who have registered for the meeting.

All contributions received will be published following the end of the consultation, unless requested otherwise.

Legal basis and background

The draft Guidelines have been developed according to Article 123(1) of Regulation (EU) No 575/2013 (CRR), as amended by Regulation (EU) 2024/1623.  

Source: European Banking Authority

The European Banking Authority (EBA) today released the final methodology, draft templates, and template guidance for the 2025 EU-wide stress test, along with the milestone dates for the exercise. The methodology and templates cover all relevant risk areas and incorporate feedback received from the industry. The stress test exercise will formally start in January 2025, following the release of the macroeconomic scenarios, with the results scheduled for publication in early August 2025.

The 2025 EU-wide stress test adopts a constrained bottom-up approach, incorporating some top-down elements. Balance sheets are assumed to remain constant, with the primary focus being the evaluation of the impact of adverse shocks on banks’ solvency. Participating banks will be required to estimate the progression of common risk factors (credit, market, counterparty, and operational risks) under a baseline and an adverse scenario. Additionally, banks must project how these scenarios will affect key income streams. For net fee and commission income, securitisation risk weights, and the credit loss trajectory of sovereign exposures, banks will use pre-defined parameters. In addition, the projections of net interest income will be centralised. The methodology also defines the sample of banks involved in the exercise.

The draft stress test templates and guidance published today might need some minor technical adjustments before their final publication at the launch.

Key Milestones for the 2025 EU-wide Stress Test:

• Launch of the exercise: second half of January 2025
• First submission of results to the EBA: end of April 2025
• Second submission to the EBA: early June 2025
• Final submission to the EBA: early July 2025
• Publication of results: beginning of August 2025

Compared to the previous stress test, the timeline has been adjusted to accommodate the feedback received from the industry and the entry into force of the revised Capital Requirements Regulation and Capital Requirements Directive (CRR3/CDR VI).

Note to the editors

1. The aim of the EU-wide stress test is to assess the resilience of EU banks to a common set of adverse economic developments, identifying potential risks, informing supervisory decisions, and increasing market discipline.
2. The EBA conducts the stress test in a bottom-up fashion with some top-down elements, using consistent methodologies, scenarios, and key assumptions developed jointly with other authorities.
3. The exercise is coordinated by the EBA in cooperation with the European Central Bank, the European Systemic Risk Board, and the Competent Authorities from all relevant national jurisdictions.
4. To give banks sufficient time to prepare, the EBA published the methodology and templates well ahead of the formal launch, when the relevant macroeconomic scenarios will be released.

Source: Government of the Netherlands

News item | 11-11-2024 | 08:00

Budget

The government will cut the development budget by around €1 billion over a five-year period. The current grants framework, with a total budget of €1.4 billion, expires in 2025. In the new policy framework, a budget of around €390 to €565 million will be available for cooperation with civil society organisations. This is for organisations both in the Netherlands and abroad. The exact amount will be determined as the details of the new policy framework for the 2026 to 2030 period are finalised. More information will be provided early next year.

Minister Klever: ‘As we agreed, the government is reducing spending on development aid,’ ‘I am setting clear priorities. My first decision is to reshape the way we work with NGOs. We will keep doing the things the Netherlands excels at. But less money will go to cooperation with civil society organisations. This will make them less dependent on government support.’

Simpler and more efficient

The government wants to simplify the funding system, for instance by paying grants directly to implementing organisations where possible. By avoiding complex arrangements, funds can be spent as efficiently as possible. In addition, local organisations and communities should more often be given a leading role. This will achieve concrete results that align more closely with local cultures, customs and norms. The government’s new approach also takes account of Dutch organisations with specialist knowledge and expertise, in areas in which the Netherlands excels.

Other priorities

Less money means the government needs to make choices. Its new policy framework will therefore focus on themes in which the Netherlands stands out internationally. From 2026 organisations will no longer receive funding for lobbying activities in the Netherlands.

In summary, funding will remain available for programmes in the following areas:

Health

• Combating HIV/AIDS in developing countries.
• Preventing harmful cultural practices such as female genital mutilation, child marriage and harmful rites of passage to adulthood.

Trade

• Stimulating women’s entrepreneurship in developing countries.
• Promoting clean and fair trade.

Human rights

• Combating violence against women in developing countries, with specific support for female human rights defenders in acute danger.
• Protecting and promoting human rights, individual freedoms and safety of members of vulnerable groups, such as religious minorities and LGBTIQ+ people.

Support for private initiatives

There are many people in the Netherlands who collect money or do voluntary work to help people in developing countries. The government wants to support these grassroots initiatives, for instance by giving them more visibility and providing grants for training and communication.

Less dependent on government

The government wants civil society organisations to become less dependent on government money. To this end, it intends to introduce stricter requirements for organisations that want to get a grant under the new policy framework. In the future, at least 50% of organisations’ total income will have to be own income, such as private donations. Currently, the requirement for nearly all grants is at least 25% own income.

Source: European Banking Authority

​Legal basis and background

Source: Government of the Netherlands

News item | 07-11-2024 | 09:13

AI in the military domain

Around the world, armed forces are investing in AI technology, in order to make decisions more quickly, predict behaviour or to distinguish between friend and foe. But the military use of AI also brings with it great dangers and dilemmas, such as:

• Who is responsible when AI makes a mistake?
• Can AI be trusted with life-and-death decisions?
• How can we prevent AI from causing a new arms race?

AI is developing rapidly. This makes it increasingly important to make agreements to ensure that countries use this technology in a responsible manner, especially in the military domain. The purpose of the newly adopted UN resolution is to ensure that this issue is discussed more often and in greater detail, with all the countries in the world.

International agreements on the responsible use of AI

AI technology is important for a strong and future-proof military, but there are also major risks associated with it. The resolution put forward by the Netherlands and South Korea discusses both the risks and opportunities that countries see, and so the resolution lays the foundation for international norms that countries must follow. That is especially important in light of all the conflicts in the world – where AI is already in regular use.

It is not only the Netherlands that sees the importance of such agreements. Previously, the United States and China submitted resolutions on the use of AI in the civil (non-military) domain.

A result of REAIM

In 2023 and 2024 the Netherlands and South Korea held an international conference on the responsible development, application and use of AI in the military domain: REAIM. The new resolution is the result of a joint call to action that government representatives issued at REAIM 2023 in the Netherlands.

Source: European Banking Authority

The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have published their third annual Report on disclosures of principal adverse impacts under the Sustainable Finance Disclosure Regulation (SFDR).

The Report assesses both entity and product-level Principal Adverse Impact (PAI) disclosures under the SFDR. These disclosures aim at showing the negative impact of financial institutions’ investments on the environment and people and the actions taken by asset managers, insurers, investment firms, banks and pension funds to mitigate them.

The findings show that financial institutions have improved the accessibility of their PAI disclosures. There has also been positive progress regarding the quality of the information disclosed by financial products, and, in general, in the quality of the PAI statements. A few National Competent Authorities (NCAs) also reported slight improvements in the compliance with the SFDR disclosures in their national markets.

Looking forward, the Report includes recommendations to NCAs to ensure convergent supervision of financial market participants’ practices, and to the European Commission for their comprehensive assessment on the SFDR.

The ESAs have also developed an overview of good practices related to the location, clarity, complexity of the disclosures based on a survey of NCAs.