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Source: European Banking Authority

The event aims to unite thought leaders from consumer organisations, regulatory authorities, EU institutions, academia, and key market participants from across the European Union to discuss significant issues in consumer protection within financial services.

Discussions will focus on following themes: artificial intelligence in financial services, access to consumer centric products and services and sustainable finance (SFDR).

The Joint Consumer Day is hosted by the Central Bank of Hungary (MNB – Magyar Nemzeti Bank) during Hungary’s Presidency of the European Union, this year’s Consumer Protection Day will be held at the Lámfalussy Conference Centre in Budapest.

Registration

Interested stakeholders can register via this link no later than 2 September 2024.

Participants are encouraged to register early due to limited seating. The ESAs recommend in-person attendance to ensure optimal expert exchanges and networking opportunities.

For more information about the event, please visit the dedicated page. 

Source: European Banking Authority

The Joint Bank Reporting Committee (JBRC), jointly set up  by the European Banking Authority (EBA) and the European Central Bank (ECB), launched today a public call for expression of interest to set up the Reporting Contact Group (RCG). The RCG will bring together stakeholders with expertise on banks’ regulatory reporting with the aim to serve as a regular channel for cooperation and exchange of views and best practices with authorities. The call for expression of interest is open to candidates representing stakeholders across the European Economic Area (EEA). The deadline for application is 01 August 2024, 23:59 CET.

Application process

The applications must be submitted via the online form (password: RCGJuly2024 ) and be accompanied by a CV (preferably in Europass format).

Relevant documents for the application are available here.

Selection process and next steps

Details on the selection process can be found in the Call for interest  document.

The final decision on the composition of the RCG will be taken by the JBRC, aiming to ensure, to the extent possible, an appropriate reflection of diversity of the banking sector, geographical and gender balance and representation of stakeholders across the EEA.

Applicants will be informed accordingly on the status of their application and the composition of the RCG will be made available on the EBA and ECB websites. The JBRC will also appoint candidates to be included on a reserve list.

The first meeting of the RCG will be organised by the Chairpersons and Secretariat of the JBRC and it is expected to take place in September/October 2024.

Background information

• The JBRC was jointly set up by the European Banking Authority (EBA) and the European Central Bank (ECB) in a Memorandum of Understanding (MoU) signed on 18 March 2024. It was established as a follow up to the feasibility study carried out by the EBA in accordance with the provisions of Article 430c(2)(c) of Regulation (EU) No 575/2013 of the European Parliament and of the Council. The JBRC fosters collaboration among European institutions and bodies – including national authorities – that prepare and issue requirements on supervisory, resolution and/or statistical reporting in the area of banking and facilitates collaboration with the wider group of stakeholders in a transparent way.
• The RCG is a permanent substructure of the JBRC. It is established with the aim to serve as a regular channel for the cooperation and exchange of views and best practices between authorities and stakeholders with expertise on bank regulatory reporting and to collaborate closely with the JBRC, and in accordance with the Charter annexed to the Memorandum of Understanding.
• The RCG shall be composed of a maximum of 22 members that will be appointed by the JBRC. The members of the RCG shall have sufficient expertise and experience in supervisory, resolution and/or statistical reporting, or in areas relevant to the tasks and deliverables of the RCG such as data modelling and standardisation.The RCG members selected by the JBRC will be appointed for a term of three years, which can be renewed. 

Source: European Banking Authority

The European Banking Authority (EBA) today published the spring edition of its risk assessment report (RAR). The report covers the EBA’s common risk assessment as well as the analysis of banks’ asset encumbrance and funding plan data, which had previously been published in two separate reports. It also includes specific chapters dedicated to EU/EEA banks’ Commercial Real Estate (CRE) exposures and EU/EEA banks’ interconnections with non-bank financial intermediaries (NBFIs). 

Highlights of the EBA risk assessment:

• EU/EEA banks face elevated geopolitical risks coupled with economic and interest rate uncertainty.
• Banks plan to gradually increase their loan exposures. Non-performing loan (NPL) ratios increased for all segments.
• EU/EEA banks have more than EUR 1.4tn in CRE loans.
• EU/EEA banks plan to significantly increase long-term market-based funding. Banks increased the availability of collateral, which can, for instance, be used for funding purposes going forward.
• CET1 headroom above overall capital requirements (OCR) and Pillar 2 Guidance (P2G) has remained at comfortable levels.
• EU/EEA banks’ profitability increased amid a rise in net interest income (NII). Going forward, the rise in NII is expected to stop.
• The relevance of operational risk has grown further. There has been a rise in cyber-attacks, including successful ones.
• NBFI activity has increased in the EU/EEA and worldwide over the past decade.

Notes to editors

This Risk Assessment Report is published for the first time as a digital publication to make data more accessible.  Users can view data tables, download the figures as images and the underlying data in CSV or Excel format provided that the source data comes from the EBA.

Related content

Risk assessment report (digital)

Risk reports and other thematic work

Source: European Banking Authority

The European Banking Authority (EBA) today published its Q4 2023 quarterly dashboard on minimum requirement for own funds and eligible liabilities (MREL), which discloses aggregated statistical information for 333 EU/EEA banks earmarked for resolution. All banks are meeting their MREL requirements in line with the Bank Recovery and Resolution (BRRD) deadline of 1 January 2024, except for 3 banks that reported technical shortfalls against this deadline. 23 banks have been granted a deadline extension. The amount of instruments coming to maturity over the next year for the sample reached EUR 207bn. 

• As of 31 December 2024, 307 banks out of a sample of 333 were meeting their MREL target.
• 3 banks reported a technical shortfall of EUR 226mn or 0.6% of their combined risk weighted assets (RWA), 0.07% of the total RWA of the sample – the shortfalls are understood to be resolved since then.
• 23 banks have been granted a transition period beyond 1 January 2024. Their combined outstanding shortfall reached EUR8.0bn or 1.6% of their combined RWAs or 0.1% of the total RWAs in of the sample.
• Banks in the sample reported EUR 207bn of MREL instruments becoming ineligible by the end of 2024 for maturity reasons. Those represent around 18.1% of MREL eligible instruments other than own funds.
• The number of banks earmarked for resolution has increased over the past year with 352 external MREL decisions received by the EBA in force as of 1 May 2024, against 309 as of 1 May 2023. This increase is essentially driven by small banks moving from liquidation to resolution.
• Transfer strategies continue to be the preferred option in terms of number of decisions (55%), while bail-in is the favoured option in terms of RWAs covered (94%).

Notes to the editors

The EBA is mandated by the BRRD to monitor the setting of MREL by authorities and the build-up of related resources by institutions.

MREL is the requirement that ensures that relevant EU institutions have sufficient loss absorbing capacity to support the execution of the preferred resolution strategy in case of failure.

The BRRD set 1 January 2024 as a deadline to meet MREL requirements except for those banks that recently changed resolution strategy, or those eligible for an extension in accordance with Art.45m of the BRRD. 

Source: European Banking Authority

The European Banking Authority (EBA) published its final draft Regulatory Technical Standards (RTS) clarifying the extraordinary circumstances for continuing the use of internal models and disregarding certain overshootings in accordance with the Fundamental Review of the Trading book (FRTB) framework

Under the Capital Requirements Regulation (CRR), competent authorities may permit institutions to derogate from certain requirements for the use of internal models in accordance with the FRTB, or apply a softer version of those requirements, under extraordinary circumstances.

The occurrence of extraordinary circumstances will be determined by the EBA, which must issue an opinion to that effect. The RTS published today set out the conditions and indicators that the EBA shall use to determine whether extraordinary circumstances have occurred.

Legal basis

The draft RTS have been developed in accordance with Article 325az(10) of Regulation (EU) No 575/2013, as amended by Regulation (EU) 2024/1623 (‘CRR3’). 

Source: European Banking Authority

The European Banking Authority (EBA) published today its amended Guidelines on arrears and foreclosure following the changes introduced in the Mortgage Credit Directive (MCD).

The EBA assessed the impact of the recent revision of Article 28(1) of the MCD and concluded that, in order to adhere to the principle that EBA Guidelines must not repeat, amend or contradict requirements set out in Level 1 legislation, the EBA Guidelines on arrears and foreclosure needed to be amended.

Guideline 4 on ‘resolution process’ has therefor been removed from the EBA Guidelines on arrears and foreclosure, as its content is now embedded in binding Union Law. The aggregate requirements set out in the MCD and the EBA Guidelines have remained unchanged.

Background and legal basis

The EBA issued its Guidelines on arrears and foreclosure (EBA/GL/2015/12) in 2015 to support the transposition of the provisions of Article 28 on arrears and foreclosure of Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property (MCD). The EBA Guidelines became applicable on the same day as the MCD itself on 21 March 2016.

In December 2021, Directive (EU) 2021/2167 on credit servicers and credit purchasers (Credit Servicers Directive – CSD), regulating the sale, purchase, and servicing of non-performing loans (NPLs) entered into force. The CSD introduced, inter alia, amendments to Article 28(1) MCD on arrears and foreclosure by replacing the existing wording with a near verbatim wording of Guideline 4 of the EBA Guidelines on arrears and foreclosure, which covers the resolution process between creditor and borrower. The amended Level 1 text became applicable at the end of December 2023.

The amended Guidelines will apply within two months of the publication of the translated versions.

Source: European Banking Authority

The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) today published joint guidelines on the suitability of members of the management body, and on the assessment of shareholders and members with qualifying holdings for issuers of asset reference tokens (ARTs) and crypto-asset service providers (CASPs), under the Markets in Crypto Assets regulation (MiCAR).

These two sets of guidelines are part of the EBA and ESMA‘s ongoing efforts to foster a transparent, secure, and well-regulated crypto-assets market, and complement the recently published governance package.

The first set of guidelines covers the presence of suitable management bodies within issuers of ARTs and CASPs, contributing to increase the trust in the financial system. Having robust governance arrangements in place will foster confidence in those assets and services, supporting the development of a healthy crypto-asset ecosystem.

It provides common criteria to assess the knowledge, skills, experience, reputation, honesty and integrity of members of the management body, as well as if they can commit sufficient time to perform their duties to ensure a sound management of these entities.

The second set of guidelines concerns the assessment of the suitability of shareholders or members with direct or indirect qualifying holdings in a supervised entity. This assessment is a key aspect of the gatekeeping function exercised by supervisory authorities, considering the significant influence that these persons may exercise on the management of the supervised entity.

It equips competent authorities with a common methodology to assess the suitability of the shareholders and members with direct or indirect qualifying holdings for the purpose of granting authorisation as issuers of ARTs or as CASPs, and for carrying out the prudential assessment of proposed acquisitions.

Background and legal basis

Regulation (EU) 2023/1114 on Markets in Crypto-assets (MiCAR) establishes a regime for the regulation and supervision of crypto-asset issuance and crypto-asset service provision in the European Union (EU). It came into force on 29 June 2023, and the provisions relating to ARTs will be applicable from 30 June 2024.

EBA and ESMA have received two joint mandates under MiCAR to issue respectively (i) guidelines on the assessment of the suitability of the members of the management body of issuers of ARTs and of the shareholders and members, whether direct or indirect, that have qualifying holdings in issuers of ARTs in accordance with Article 21(3), and (ii) guidelines on the assessment of the suitability of the members of the management body of the CASP and of the shareholders or members, whether direct or indirect, that have qualifying holdings in the CASP in accordance with Article 63(11).

In addition, EBA and ESMA have consider also appropriate to integrate part of such mandate with own initiative Guidelines under Article 16 of their respective founding Regulation, to clarify the circumstances giving rise to a qualifying holdings, i.e acting in concert, significant influence, indirect shareholders and decision to acquire and clarifying the methodology to assess the suitability, in accordance with Article 42(1), points (a) to (e) and  Article 84(1), points (a) to (e) of MiCAR, of a proposed acquirer of qualifying holdings in an issuer of ARTs authorised under Article 21 of that Regulation or in a CASP authorised under Article 62 of that Regulation, respectively.

Source: European Banking Authority

The European Banking Authority (EBA) today published an Opinion addressed to Consob, the Italian Securities Commission, in response to the Competent Authority’s notification of its decision to grant the permission referred to in Article 26e(10) of the Securitisation Regulation, which specifies the eligibility criteria for high-quality collateral for on-balance-sheet securitisations to qualify as Simple, Transparent, and Standardised (STS).

The EBA has assessed the evidence provided by the Consob, namely the current classification of Italian credit institutions and the composition of the Italian synthetic securitisation market. On the basis of the evidence provided, the EBA is of the opinion that due to the objective impediments related to the credit quality step (CQS) assigned to Italy, the use of a partial waiver to allow collateral in the form of cash on deposit with the originator, or one of its affiliates, qualifying for CQS 3 is justified.

Legal basis, background, and next steps

The EBA’s competence to deliver this Opinion is based on Article 29(1)(a) of Regulation (EU) No 1093/2010. In accordance with the process set forth in Decision of the European Banking Authority EBA/DC/462 , the Opinion has been adopted.

Article 26e(10) of the Securitisation Regulation (EU) No 2017/2402 specifies that the credit protection provided in on-balance-sheet securitisations must meet high-quality collateral standards. By way of derogation, if certain conditions are met, the originator may use high-quality collateral in the form of cash on deposit with the originator or its affiliates, provided they qualify for at least CQS 2. Competent authorities may, under specific conditions and after consulting the EBA, permit collateral in the form of cash on deposit with the originator or its affiliates if they qualify for CQS 3.

Consob will regularly review the conditions of the waiver and appropriate measures will be taken if the impediments cease to exist.

Source: European Banking Authority

The European Banking Authority (EBA) today published an updated Report on the monitoring of Additional Tier 1 (AT1), Tier 2 and total loss absorbing capacity (TLAC) as well as the minimum requirement for own funds and eligible liabilities (MREL) instruments of European Union (EU) institutions. Today’s update provides new guidance on the prudential valuation of non-CET1 instruments and on other aspects related to the terms and conditions of the issuances.

This Report builds upon the 2023 update with substantial amendments made. In particular, the EBA clarifies that the prudential valuation of capital instruments should reflect their actual loss absorbency capacity, meaning that such instruments should be measured on the basis of the amount of Common Equity Tier One (CET1) capital that would be generated in the event of a write-down or conversion, being the carrying amount with no adjustment.

In addition, the Report addresses the approaches followed by some institutions to timely reflect from a prudential perspective FX effects on AT1 instruments classified as equity and stresses the need to ensure a consistent application over time when these approaches are used.

The Report also specifies the conditions under which different loss absorbency mechanisms (conversion and write-down) and trigger levels can operate simultaneously within the same institution, with the need in particular to fully adhere to the EBA existing guidance and AT1 standardised templates.

Other aspects covered in the Report include clarifications and recommendations on the redemption of own funds and eligible liabilities instruments, on early redemption clauses, and on the need to include contractual bail-in recognition clauses in own funds instruments issued under English law.

Going forward, the EBA will continue to monitor the quality of the AT1, Tier 2 and TLAC/MREL instruments and stands ready to provide additional guidance where necessary.

Legal basis and background

In accordance with Article 80 of the CRR on the continuing review of the quality of own funds, ‘the EBA shall monitor the quality of own funds and eligible liabilities instruments issued by institutions across the Union and shall notify the Commission immediately where there is significant evidence that those instruments do not meet the respective eligibility criteria set out in this Regulation’.

Source: European Banking Authority

The European Banking Authority (EBA) welcomes the entry into force of the new EU framework that will transform how Europe tackles money laundering and terrorist financing. The EBA is proud to be paving the way for the establishment of the new anti-money laundering and countering the financing of terrorism authority (AMLA) and is committed to facilitating a smooth transition, and making the EU a hostile place for financial crime.

Since 2020, the EBA has been leading, coordinating and monitoring the EU financial sector’s fight against money laundering (ML) and terrorist financing (TF). The new legislative framework marks a significant step forward in the EU’s fight against financial crime, with a harmonised and single AML/CFT rulebook, and the establishment of AMLA, a dedicated EU anti-money laundering authority.

The EBA will retain its AML/CFT powers and mandates until December 2025 to minimise disruption and provide continuity, and it will also continue working closely with AMLA going forward. In particular, after transferring the powers that are specific to AML/CFT to AMLA, the EBA will remain responsible for addressing ML/TF risk across its prudential remit.

Since its inception, the EBA has been working to ensure that financial institutions and their supervisors apply effective AML/CFT controls wherever they operate in the EU, providing a solid foundation for the new regime. The European Commission has asked the EBA to provide its technical advice on important aspects of the future EU AML/CFT framework to ensure that AMLA can begin to operate efficiently and effectively as of its establishment.

Over the course of 2024 and in 2025, the EBA’s priorities in the area of AML/CFT will focus on the following aspects:

• a methodology for selecting financial institutions for direct EU-level AML/CFT supervision;
• a common risk assessment methodology;
• information necessary to carry out customer due diligence;
• criteria to determine the seriousness of a breach of AML/CFT provisions.

The EBA will be providing its advice to the Commission in October 2025.

Throughout the transition phase, the EBA will also support national competent authorities getting ready for AMLA and will coordinate with the European Commission’s AMLA taskforce, which will be responsible for the establishment and initial operations of AMLA.

Note to the editors

In 2024, the co-legislators agreed on a new AML/CFT package to strengthen the EU’s fight against financial crime.

The Regulation establishing AMLA (2024/1620), the Regulation establishing a single AML/CFT Rulebook (2024/1624) and the revision of the AML/CFT Directive (AMLD6 – 2024/1640) were published in the Official Journal of the European Union on the 19 of June.

Once established, AMLA will directly supervise the cross-border credit and financial institutions exposed to highest money laundering and terrorist financing (ML/TF) risk. It will also draft AML/CFT standards and guidelines, oversee AML/CFT supervisors, and coordinate Financial Intelligence Units (FIUs). In accordance with Article 103 and 108 of Regulation 2024/1620, the EBA will transfer its AML/CFT mandates, powers and resources to AMLA by the end of 2025.