19 September 2014

CRD IV Matters

Anne Leslie-Bini - Invoke Software

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EBA updates its work programme for 2014

23 April 2014  |  983 views  |  0

On the same day as it announced a delay to the first round of Liquidity and COREP reporting to the 30th of June, the European Banking Authority (EBA) also published an addendum to its work plan for 2014 following a series of calls for advice from the European Commission. At this stage, the EBA is busy dotting the i's and crossing the t's in implementing CRD IV, and the additional work will mostly consist of technical advice on a number of topics related to provisions contained in the CRR/CRD. The EBA will inform the European Commission in the preparation of reports to the European Parliament and the Council and, where appropriate, legislative acts.

The EBA technical advice will mostly build on work already being conducted by the EBA and will specifically cover the following topics:

  • Own funds requirements for covered bonds (Article 503 of the CRR): the EBA has already started developing advice on the preferential treatment of covered bonds in prudential regulation across the EU.
  • Capital requirements on exposures to transferred credit risk (Article 512 of the CRR): the EBA will build its advice on the basis of the work it already carried out on securitisation retention rules.
  • Implementation of the ICAAP and Pillar 2 requirements (Article 161(4) of the CRD): the EBA will provide advice on the use of waivers based on the analysis of data provided by National Competent Authorities (NCAs).
  • Scope of application and exemption of Pillar 1 requirements (Article 508(1) of the CRR): the EBA will advise on the use of waivers and will base the work on data analysis provided by NCAs.
  • Longer-term refinancing operations (Article 161(9) of the CRD): the EBA will report on the use and benefits of LTROs and other Central Bank funding support.
  • Consistency of macro-prudential rules (Article 513 of the CRR): in the context of the consultation foreseen under Article 513 of the CRR, the EBA will focus its analysis on the procedural set-up of the macro-prudential framework and its overall consistency across the EU.
  • Prudential filter for fair value gains and losses arising from the institution's own credit risk related to derivative liabilities (Article 502 of the CRR): the EBA will advise on the level of prudence of alternative methods to treat fair value gains and losses arising from an institutions' own credit standing, as well as the reasons why such methods would be necessary.
  • Implementing acts on third country equivalence decisions (Articles 107(4), 114(7), 115(4), 116(5), 132(3), 142(2) of the CRR): during the course of 2014 and 2015, the EBA, assisted by the NCAs, will conduct assessments of the equivalence of the regulatory and supervisory regimes in a number of third countries applicable to exposures to credit risk, to central governments or central banks, to regional governments or local authorities, to public sector entities and exposures in the form of units or shares in CIUs, and regarding the definition of a large financial sector entity.
  • Appropriateness of the definition of eligible capital applied for the purposes of the Large Exposures regime (Article 517 of the CRR): the EBA will provide its views on the experience gathered regarding the use of the new definition of eligible capital.
  • Long Term Financing (Article 505 of the CRR): this call for advice relates to topics already included in the EBA work programme, such as the impact assessment on the leverage ratio and the NSFR, which will be carried out as planned. The EBA will, therefore, focus its advice on the development of the securitisation market to promote long term financing and it will aim at identifying areas in the CRD/CRR that can have a potential impact on long term financing.
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