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The following posts provide a snapshot of the principal U.S., European and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

  • HM Treasury Provides Guidance on Application of EU CRR Quick Fix Package During Brexit Transitional Period
    07/16/2020

    HM Treasury has published a statement on the application of the EU CRR Quick Fix package during the Brexit transitional period. The EU CRR Quick Fix package consists of a Regulation amending the Capital Requirements Regulation (and also amending the Regulation amending the CRR, known as CRR2) and it was published in the Official Journal of the European Union on June 26, 2020. The Regulation forms part of the EU's response to the coronavirus pandemic.

    Read more.
  • Basel Committee on Banking Supervision Finalizes Credit Valuation Adjustment Risk Framework
    07/09/2020

    The Basel Committee on Banking Supervision has published final revisions to the credit valuation adjustment risk framework under the Basel III standards. The updated international standard sets out the proposed regulatory capital treatment of CVA risk for derivatives and securities financing transactions. The CVA risk framework is designed to manage the risk of banks incurring mark-to-market losses from deterioration in the creditworthiness of counterparties in derivatives or SFTs. The framework was last revised in December 2017, partly to align it with the Basel Committee's market risk framework. The latest revisions include:
     
    1. The reduction of certain risk weights;
    2. The introduction of new index buckets and revised aggregation of CVA capital requirements;
    3. An amendment to the scope of portfolios subject to CVA risk capital requirements. SFTs, where the CVA risks stemming from such positions are not material, are excluded and certain client-cleared derivatives are exempt; and
    4. Revision of the overall calibration of the CVA risk framework, covering both the standardized and the basic approach.

    View the updated CVA standard.
  • European Banking Authority Report on Implementation of EU Prudential Framework During COVID-19
    07/07/2020

    The European Banking Authority has published a report on the implementation of certain prudential policies introduced by the EBA to deal with the effects of the COVID-19 pandemic. The report focuses on two areas in particular: implementation issues around the EBA's Guidelines on legislative and non-legislative moratoria on loan repayments and the criteria that institutions should follow for the identification and treatment of operational risk events and losses.

    Read more.
  • Basel Committee on Banking Supervision Publishes Final Updated AML Guidelines
    07/02/2020

    The Basel Committee on Banking Supervision has published final updated guidelines on the "Sound management of risks related to money laundering and financing of terrorism". The updated guidelines apply to all banks, banking groups and relevant regulators.

    The updated guidelines include detailed guidance on the interaction between prudential and AML/CFT supervision to enhance the effectiveness of the supervision of banks' AML/CFT regimes. The updated guidelines also merge and replace two other Basel Committee documents, namely Customer due diligence for banks (October 2001) and Consolidated KYC risk management (October 2004). The guidelines should be read in conjunction with other Basel Committee papers, such as the Core principles for effective bank supervision, as well as relevant guidance published by the Financial Action Task Force.

    View the updated guidelines.
  • Final EU Guidelines on the Treatment of Structural FX Under Capital Requirements Regulation
    07/01/2020

    The European Banking Authority has published final guidelines on the implementation of the structural FX provision under the Capital Requirements Regulation. The CRR requires institutions to calculate their net open positions in currencies according to specified formulae but permits institutions to exclude positions that have been taken for hedging purposes and that are structural. The guidelines will apply to both firms and national regulators from January 1, 2022, to allow firms time to comply with the new framework.  However, regulators should review, update or revoke permissions already granted before the guidelines apply.

    Read more.
  • UK Prudential Regulator Statement on EU CRR ‘Quick Fix’ Package
    06/30/2020

    The U.K. Prudential Regulation Authority has published a statement on the EU Capital Requirements Regulation ‘Quick Fix’ package, confirming that it applies directly to all PRA-regulated firms. The CRR Quick Fix package has applied across the EU since June 27, 2020. The CRR Quick Fix package is part of the EU’s response to the coronavirus pandemic.

    In its statement, the PRA confirms that U.K.-regulated banks already applying the CRR transitional arrangements for IFRS 9 must implement the revised calculations as a result of the Quick ix package, which extended by two years the transitional measures for the implementation of IFRS 9. In addition, a bank contemplating ceasing to apply the IFRS 9 transitional measures must first obtain PRA approval to do so. The PRA is encouraging those banks to submit their requests by July 31, 2020, which requests must include a written explanation of the basis on which senior management has satisfied itself with the continuing adequacy of the bank’s financial resources.

    Read more.
  • EU Banking ‘Quick Fix’ Regulation Published
    06/26/2020

    A new EU Regulation amending the Capital Requirements Regulation (and also amending the Regulation amending the CRR, known as CRR2), has been published in the Official Journal of the European Union. It is known as the CRR Quick Fix package and applies from June 27, 2020. The Regulation forms part of the EU’s response to the coronavirus pandemic. 

    Read more.
  • EU Amends Technical Standards on Prudent Valuation in Response to COVID-19
    06/25/2020
    An EU Regulation amending the Regulatory Technical Standards on prudent valuation has been published in the Official Journal of the European Union. The amending Regulation amends Delegated Regulation (EU) No 101/2016 (which supplements the EU Capital Requirements Regulation) by increasing the aggregation factor applicable to the core approach from 50% to 66% until December 31, 2020, with the aim of it applying for the June 30, 2020, COREP reporting. The amending Regulation applies from June 26, 2020.

    View the amending Regulation.
  • European Banking Authority Publishes Amended Draft Technical Standards for Passport Notifications
    06/18/2020

    The European Banking Authority has published amending draft Regulatory Technical Standards and Implementing Technical Standards on passporting notifications under the fourth Capital Requirements Directive. CRD4 requires an EU bank wishing to establish a branch in another EU Member State to notify the national regulator of its home Member State of certain information. In the event of any changes in the information supplied, the relevant bank must notify the national regulators of both the home and host Member State at least one month prior to the change coming into effect. In 2014, the EBA produced RTS on the information to be provided to the national regulators in connection with the exercise of these passporting rights, and ITS on the forms, templates and procedures for such notifications.

    Read more.
  • European Banking Authority Extends Payments Moratoria Guidelines
    06/18/2020

    The European Banking Authority has extended the applicability of its Guidelines on legislative and non-legislative loan repayments in light of the ongoing effects of COVID-19. The Guidelines were originally published in April 2020 and stated that, where payment moratoria were based on national law or a private-sector initiative broadly applied by credit institutions in response to COVID-19, they would not be classified as forbearance or distressed restructuring measures. The Guidelines as originally published applied to moratoria applied before June, 30 2020. That deadline has now been extended to moratoria applied before September 30, 2020.
     
    View the EBA's updated statement on its Guidelines on payments moratoria.
     
    View details of the EBA's original statement on its Guidelines on payments moratoria.
  • European Banking Authority Publishes Peer Review of Deposit Guarantee Scheme Stress Test Results
    06/17/2020

    The European Banking Authority has published the results of its peer review of EU deposit guarantee schemes. The EU Deposit Guarantee Scheme Directive establishes requirements for EU DGSs, including that Member States conduct stress tests of their DGSs. Member States were required to report on their stress tests by July 3, 2019, and the EBA has based its peer review report on the results of the tests. The report is intended to assess the resilience of EU DGSs and identify good practices and areas for improvement.

    Read more.
  • UK Regulators Acknowledge European Systemic Risk Board Recommendation on Financial Institution Distributions
    06/08/2020

    The Bank of England and U.K. Prudential Regulation Authority have publicly acknowledged the ESRB's Recommendation on the restriction of distributions during COVID-19. The ESRB recommends that EU financial institutions refrain from making dividend distributions, entering into buy-backs of ordinary shares or creating obligations to pay variable remuneration to material risk takers where those actions reduce the quantity or quality of own funds at the EU group level and sub-consolidated or individual level. The BoE and PRA note that the Recommendation applies to U.K. authorities during the Brexit transition period.

    View the BoE and PRA's joint statement on the ESRB's Recommendation.

    View details of the ESRB's Recommendation.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • European Systemic Risk Board Announces Further Actions to Combat Impact of COVID-19
    06/08/2020

    The European Systemic Risk Board has announced a series of further actions designed to combat the impact of COVID-19 on European financial markets. The actions relate to the five priority areas already identified by the ESRB as requiring particular focus in the context of the COVID-19 pandemic, as follows:
    • Implications for the financial system of guarantee schemes and other fiscal measures to protect the economy: the ESRB has published a Recommendation introducing minimum requirements for national monitoring of the financial stability implications of the various debt moratoria and guarantee schemes introduced by Member States to support economies through COVID-19 (Recommendation A); national regulators are also advised to regularly report information on these schemes to the ESRB in accordance with reporting templates to be published by the ESRB by June 30, 2020 (Recommendation B); national regulators implicated by the Recommendation should communicate the actions they have taken, or intend to take, in response to the Recommendation A by July 31, 2020 and Recommendation B by December 31, 2020;
    Read more.
  • UK Prudential Regulator Publishes Further Guidance on IFRS 9 and Capital Requirements
    06/04/2020

    The U.K. Prudential Regulation Authority has published a “Dear CEO” letter providing further guidance on IFRS 9 and capital requirements in the context of COVID-19. The PRA published a “Dear CEO” letter in March 2020, advising firms on the application of certain key concepts (including the definition of "default" in the Capital Requirements Regulation and expected credit loss accounting under IFRS 9). This guidance related in large part to payment holidays, many of which are now coming to an end. The PRA’s latest guidance therefore focuses on exits from those initial payment deferrals. 

    Read more.
  • EU Consultation on Proposed Capital Requirements of Non-Modellable Risks Under the Fundamental Review of the Trading Book
    06/04/2020

    The European Banking Authority has opened a consultation on proposed Regulatory Technical Standards on capital requirements of non-modellable risks under the Fundamental Review of the Trading Book. The Regulation amending CRR, which was finalized in June 2019, implements, among other things, the Basel III revised requirements to calculate own funds requirements for market risk (FRTB). It will apply directly across the EU from June 28, 2021. The consultation closes on September 4, 2020.

    Read more.
  • First Consultations on Proposed Technical Standards for New EU Investment Firm Prudential Regime
    06/04/2020

    The European Banking Authority has opened consultations on several draft technical standards required to implement the new prudential framework for investment firms. The Investment Firm Regulation and the Investment Firm Directive introduce a more tailored prudential regulatory regime for many EU investment firms that reflect the risks inherent in the diverse activities those firms undertake. It also aims to amend the prudential requirements imposed on certain investment firms to avoid the imposition of undue administrative burdens by removing those firms from the scope of the revised Capital Requirements Regulation and Capital Requirements Directive. Only the largest investment firms will be subject to, and need to obtain bank authorization under, CRD and CRR. The majority of both the IFR and IFD will apply from June 26, 2021. The EBA's consultations are on proposed technical standards that will supplement the IFR and IFD.

    Read more.
  • European Banking Authority Publishes Roadmap on Investment Firm Regulation and Directive Deliverables
    06/02/2020

    The European Banking Authority has published a new roadmap under the Investment Firm Regulation and the Investment Firm Directive. The IFR and IFD introduce a more tailored regulatory regime for many EU investment firms that reflects the risks inherent in the diverse activities those firms undertake. It also aims to amend the prudential requirements imposed on certain investment firms to avoid the imposition of undue administrative burdens by removing them from the scope of the revised Capital Requirements Regulation and Capital Requirements Directive. The majority of both the IFR and IFD will apply from June 26, 2021.

    The EBA's roadmap sets out the timing for the EBA to produce final versions of Regulatory Technical Standards, Implementing Technical Standards, Guidelines and Reports. The EBA must also establish a list of capital instruments and a database of administrative sanctions. The mandates will be delivered in four phases, starting from December 2020, and cover:
    • Thresholds and criteria for investment firms to be subject to the CRR;
    • Capital requirements and composition;
    • Reporting and disclosure;
    • Remuneration and governance;
    • Supervisory convergence and supervisory review and Pillar 2; and
    • Environmental, social and governance exposures.

    View the EBA's IFR and IFD Roadmap.

    View details of the IFR and IFD.
  • UK Prudential Regulator Publishes Statement on Electronic Signatures
    06/02/2020

    The U.K. Prudential Regulation Authority has published a statement on the use of electronic signatures in the context of remote working arrangements during the COVID-19 pandemic. The PRA has stated that, in the absence of specific legal provisions to the contrary, firms are entitled to use electronic signatures to submit forms and other regulatory documents to the PRA. The advice does not extend to the use of electronic signatures more generally.

    Read more.
  • European Banking Authority Publishes Guidelines on COVID-19 Exposures Reporting
    06/02/2020

    The European Banking Authority has published guidelines on bank reporting and disclosure of exposures subject to measures designed to protect borrowers from the economic impact of the COVID-19 crisis. The measures include payment moratoria, which are exempt from prudential treatment as forbearance measures and therefore not subject to the usual supervisory reporting framework. Public guarantee schemes introduced in many Member States are also not captured by existing reporting frameworks. This has created a data gap, which has implications for the risk-analysis of individual institutions and for overall financial stability in the EU.

    Read more.
  • European Banking Authority Reports on Impact of COVID-19 on EU Banking Sector
    05/25/2020

    The European Banking Authority has published a report on the impact of the COVID-19 pandemic on the financial health of EU banks. The report is mostly based on supervisory data submitted by banks in Q4 2019 and Q1 2020. The EBA's report confirms that banks have activated their contingency plans in response to the crisis, however, their operational capabilities remain under pressure. In addition, some banks have used parts of their capital and liquidity buffers and are expected to continue to do so in the coming months. The report also confirms that the asset quality of banks is likely to continue deteriorating as non-performing loan volumes increase.

    View the EBA's report.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • UK Prudential Regulator Publishes Guidance on Treatment of COVID-19 Payment Holidays
    05/22/2020

    The U.K. Prudential Regulation Authority has published a new statement on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address COVID-19. The statement follows the announcements made by the PRA, the U.K. Financial Conduct Authority and the U.K. Financial Reporting Council in March 2020 on financial reporting and audit requirements in light of COVID-19. Those announcements included a letter from the PRA to banks on the application of IFRS 9 (including expected credit loss accounting) to loan arrangements during the pandemic.

    Read more.
  • European Central Bank Consults on Climate-Related and Environmental Risks Guide for Banks
    05/20/2020

    The European Central Bank has launched a consultation on its proposed guide on how Eurozone banks should manage and disclose climate-related and environmental risks in accordance with the EU prudential framework. The guide is not legally binding, but aims to raise awareness within the Eurozone banking industry of climate-related and environmental risks and to improve the management of such risks. The consultation closes on September 25, 2020.
     
    The guide applies to significant institutions directly supervised by the ECB, although national regulators in Eurozone member states are expected to apply the guide’s expectations proportionately when supervising less significant Eurozone banks. It should be read in the context of the wider EU bank prudential framework, with particular reference to the Capital Requirements Regulation, the Capital Requirements Directive and relevant ECB guidelines. The guide includes an overview of the nature and characteristics of climate-related and environmental risks as well as the ECB’s supervisory expectations of banks’ business models and strategies, governance and risk appetite and integration of climate-related and environment risks into their credit, operational, market and liquidity risk management frameworks.
     
    View the ECB's consultation on its Climate-Related and Environmental Risks Guide.
  • EU Single Resolution Board Publishes Revised MREL Policy
    05/20/2020

    The EU Single Resolution Board has published a revised policy on minimum requirements for own funds and eligible liabilities. The policy is applicable to Eurozone banks and reflects the changes made in 2019 to the EU Banking Package (which includes the Bank Recovery and Resolution Directive, the Capital Requirements Regulation and the Capital Requirements Directive).

    Read more.
  • EU Single Resolution Board Publishes Revised MREL Policy
    05/20/2020

    The EU Single Resolution Board has published a revised policy on minimum requirements for own funds and eligible liabilities. The policy is applicable to Eurozone banks and reflects the changes made in 2019 to the EU Banking Package (which includes the Bank Recovery and Resolution Directive, the Capital Requirements Regulation and the Capital Requirements Directive). 

    Read more.
  • UK Regulator Confirms Policy on Credit Risk
    05/14/2020

    The U.K. Prudential Regulation Authority has published a Policy Statement on its approach to implementing the European Banking Authority's Technical Standards and Guidelines on Probability of Default estimation, Loss Given Default estimation and the treatment of defaulted exposures in the Internal Ratings Based approach to credit risk. The EBA's regulatory products are designed to address concerns about the variability of own funds requirements arising from the internal models that firms use to calculate their minimum credit risk capital requirements under the Capital Requirements Regulation. The Policy Statement is relevant to U.K. banks, building societies and PRA-designated U.K. investment firms.

    Read more.
  • European Systemic Risk Board Actions on Five COVID-19 Priority Areas
    05/14/2020

    The European Systemic Risk Board has established five priority areas on which it intends to take action to combat the impact of COVID-19 on the EU financial system. In determining its actions, the ESRB hopes to ensure an effective response to the pandemic across the EU that prevents individual Member State actions from negatively impacting the EU Single Market and to take advantage of flexibility in regulatory standards to support financial institutions in providing financial services and liquidity.

    Read more.
  • European Banking Authority to Act on Dividend Arbitrage Trading Schemes
    05/12/2020

    In response to the November 2018 request of the European Parliament to conduct an enquiry into dividend arbitrage trading schemes, the European Banking Authority has published a report (dated April 28, 2020) on the approach of national regulators across the EU to tackle market integrity risks associated with dividend arbitrage trading schemes. The EBA has also published a ten-point Action Plan to address the risks arising from such schemes. Both the report and Action Plan accompanied the EBA's letter to the European Parliament that describes its actions and the steps it intends to take in the future on this issue.

    The report sets out the findings arising from the enquiry, which consisted of surveys of national authorities responsible for anti-money laundering and counter terrorist financing and of national prudential regulators. The EBA found that dividend arbitrage trading schemes are not possible in all EU member states and that, where they are possible, they are not always regarded as a tax crime. The EBA concluded that AML and prudential authorities approach dividend arbitrage trading schemes in different ways and there are variations in the extent to which the handling of the proceeds from these schemes by financial institutions constitutes money laundering.

    Read more.
  • UK Prudential Regulator Statement on Pillar 2A Capital Requirements
    05/07/2020

    The U.K. Prudential Regulation Authority has published a statement announcing its decision to set all Pillar 2A requirements to a nominal amount for the purposes of the 2020 and 2021 Supervisory Review and Evaluation Processes, instead of their usual percentage of Risk Weighted Assets. The statement applies to all firms subject to the Capital Requirements Regulation and Capital Requirements Directive. The PRA has said that it is making the change as it does not consider that RWAs are a useful measure for the evolution of risks in the stressed situation that the pandemic represents. The outcome of the change is that banks are freed up to use their Pillar 2A capital to fund lending and other activities.

    Read more.
  • Bank of England Publishes Interim Financial Stability Report on Impact of COVID-19
    05/07/2020

    The Bank of England’s Financial Policy Committee and Monetary Policy Committee have published reports focusing on the impact of COVID-19 on the U.K. economy and banking sector, together with the minutes of their May Committee meetings and a transcript of the BoE’s joint FPC and MPC press conference, discussing the findings of the Committee reports.

    Read more.
  • EU Consultation on STS Framework for Synthetic Securitization
    05/06/2020

    The European Banking Authority has published a report on the feasibility of developing a framework for simple, transparent and standardized synthetic securitization that is limited to balance-sheet securitization under the EU Securitization Regulation.

    The EBA is recommending:
    • The establishment of a cross-sectoral framework for STS synthetic securitization that is limited to balance-sheet securitization;
    • To be eligible for 'STS' status, a synthetic securitization must comply with the proposed STS criteria, including the criteria adapted appropriately for synthetic securitization;
    • The European Commission should consider the potential for a differentiated capital treatment for STS balance-sheet synthetic securitization; and
    • Any proposal for STS synthetic securitization should include a mandate to the EBA to monitor the functioning of the STS synthetic market.

    The European Commission will consider the report and recommendations in preparing its own report and, if appropriate, legislative proposal.

    View the EBA's report on a STS framework for synthetic securitization.
  • UK Prudential Regulator on Regulatory Treatment of UK Bounce Back Loan Scheme
    05/04/2020

    The U.K. Prudential Regulation Authority has published a statement on credit risk mitigation eligibility and the leverage ratio treatment of loans made under HM Treasury's Bounce Back Loan Scheme and a separate modification by consent of the exclusion of loans under the BBLS from the calculation of the total exposure measure of the leverage ratio.

    Read more.
  • Bank of England Announces COVID-19 Changes to Resolution Measures
    05/01/2020

    The Bank of England and U.K. Prudential Regulation Authority have issued a statement on changes to the resolution measures applicable to the major U.K. banks and building societies, designed to ease the operational burden on firms in the wake of COVID-19.

    The dates by which firms must submit their first reports describing their preparations for resolution, and publish summaries of those reports, under the BoE and PRA’s new Resolvability Assessment Framework have been extended by one year. The first reports should be submitted to the PRA by October 2021 and public disclosures should be made by June 2022.

    Read more.
  • UK Regulators Respond to Amended COVID-19 Support Packages
    04/27/2020

    The U.K. Prudential Regulation Authority and the U.K. Financial Conduct Authority have published guidance for firms on the implications of HM Treasury's amendments to the U.K. Coronavirus Business Interruption Loan Scheme and Coronavirus Large Business Interruption Loan Scheme and the introduction of the Bounce Back Loan Scheme.

    HM Treasury has announced the new BBLS which will run alongside the existing CBILS and CLBILS, providing government guarantees for loans to small businesses of between £2,000 and £50,000. The minimum threshold for CBILS loans will be increased to £50,001, and firms with existing CBILS loans of £50,000 or less will be entitled to switch their facility to the BBLS. The BBLS will launch for applications from May 4, 2020.

    Read more.
  • European Banking Authority Publishes Guidance on Prudential Flexibility for COVID-19
    04/22/2020

    The European Banking Authority has published guidance on its supervisory flexibility for certain aspects of the European bank prudential regulatory framework, in light of the COVID-19 pandemic.

    Read more.
  • UK Prudential Regulator Publishes Q&A on Use of Liquidity and Capital Buffers During COVID-19
    04/20/2020

    The U.K. Prudential Regulation Authority has published a Q&A guide on how banks should use their capital and liquidity buffers during the COVID-19 crisis. The PRA and Financial Policy Committee have stressed the important role that banks must play in providing liquidity to the economy in the wake of the pandemic, using all tools at their disposal, including the buffers built up in the years since the 2007-2009 financial crisis.

    Read more.
  • UK Conduct Regulator Statement on Financial Resilience for Solo-Regulated Firms
    04/17/2020

    The U.K. Financial Conduct Authority has published a statement on its intended approach to prudential regulation of FCA solo-regulated firms during the COVID-19 pandemic. Firms are expected to plan ahead and prudently manage their financial resources. Firms that have been set capital buffers are permitted to use them to support the continuation of their activities, but should contact the FCA if they intend to draw down a buffer. Firms should also maintain up-to-date wind-down plans taking account of the impact of COVID-19 and should contact the FCA if they are concerned about their ability to meet debts as they fall due or their wind-down plans identify material execution risks. Boards should be satisfied that any discretionary distributions of capital to fund share buy-backs, dividends, or upstream cash are prudent.
     
    View the FCA's statement on financial resilience for solo-regulated firms.
  • European Central Bank Announces Capital Requirements Relief for Market Risk
    04/16/2020

    The European Central Bank has announced its decision to temporarily reduce capital requirements for market risk in response to high levels of volatility arising from the COVID-19 pandemic. The reduction will be effected via the reduction of the qualitative market risk multiplier, a supervisory measure that is set by regulators and used to compensate for underestimation of market risk capital requirements. The ECB's decision will be reviewed after six months.
     
    View the ECB's announcement on capital requirements relief for market risk.
  • G20 Action Plan for COVID-19
    04/15/2020

    The G20 finance ministers and central bank governors have published an Action Plan for the international response to the COVID-19 pandemic. The Action Plan covers the healthcare, economic and fiscal responses that G20 members have agreed to undertake, as well as measures to ensure a return to a strong and sustainable global economy, the provision of support to countries in need and the learning of lessons in preparation for future crises.

    Read more.
  • COVID-19: European Central Bank Confirms Easing of Prudential Measures for Large Eurozone Banks
    04/15/2020

    The European Central Bank, Banking Supervision has published a letter addressed to the significant Eurozone banks that it directly prudentially supervises under the Single Supervisory Mechanism. The ECB, Banking Supervision, expresses its support of the EBA's statement dated March 31, 2020 on supervisory reporting and Pillar 3 disclosures. In line with the EBA's statement, the ECB: (i) confirms that significant Eurozone banks may delay by one month the submission of supervisory data for remittance dates between March 2020 and May 2020; (ii) excludes information on the liquidity coverage ratio; and (iii) is allowing firms an additional two months to submit information on funding plans.

    The ECB recommends that Eurozone national regulators should apply the same delays to the smaller Eurozone banks.

    View the ECB's letter to significant banks.

    View details of the EBA's statement on supervisory reporting and Pillar 3 disclosures.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
  • European Banking Authority Updates Guidelines on Equivalence of Non-EU Confidentiality Regimes
    04/15/2020

    The European Banking Authority has published updated Guidelines on the equivalence of confidentiality regimes under the Capital Requirements Directive. The EBA has added one new third-country national regulator—the New York State Department of Financial Services—to the current list of third-country national regulators whose confidentiality regimes can be regarded as equivalent to those in the EU, following an assessment of the professional secrecy and confidentiality frameworks under which they operate. The updated recommendations apply from April 16, 2020. The Guidelines are intended to assist national regulators in the EU in their assessment of third-country equivalence with the aim of facilitating cooperation with third-country supervisory authorities and their participation in supervisory colleges overseeing international banks.

    View the updated Guidelines.
  • UK Prudential Regulator Announces Delays for Certain Regulatory Reporting and Disclosure Requirements
    04/09/2020

    The U.K. Prudential Regulation Authority has announced a series of amendments to regulatory reporting and disclosure requirements applicable to U.K. banks, building societies, designated investment firms and credit unions, in light of the global COVID-19 pandemic. The PRA’s changes follow recent statements and recommendations made by the European Banking Authority, providing clarity on measures to mitigate the impact of COVID-19 on the EU banking sector.

    Read more.
  • UK Prudential Regulator Publishes 2020/2021 Business Plan
    04/09/2020

    The U.K. Prudential Regulation Authority has published its Business Plan for 2020/2021, which sets out its strategic goals for the next 12 months and its work plan to deliver them. The PRA has had to tailor its intended Business Plan to take account of the impact of the COVID-19 pandemic. In particular, it has elected to cancel its 2020 annual cyclical scenario stress tests, delay the publication of the results of the 2019 biennial exploratory scenario, postpone less critical aspects of its supervisory program for individual firms and extend consultation periods and implementation timeframes for new initiatives where possible.

    Read more.
  • UK Prudential Regulator Takes Further Steps in Response to COVID-19
    04/09/2020

    The U.K. Prudential Regulation Authority has announced two further measures in response to the coronavirus outbreak. The first is the PRA's decision to maintain the systemic risk buffer rates at the rate set in December 2019. The rates determine the amount of additional regulatory capital that must be held by "systemic risk buffer institutions" (i.e. U.K. financial institutions deemed to be systemically important). In scope firms are the so-called "ring-fenced bodies" within the meaning in the Financial Services and Markets Act 2000 and include banks and large building societies holding more than £25bn in deposits. The buffer applicable to each institution is intended to reflect the relative costs to the U.K. economy if the institution in question were to fall into distress. In December 2019, the PRA maintained the rates that had first been set in May 2019. The SRB rates will be re-assessed in December 2021 and the decision taken then will take effect in January 2023.

    Read more.
  • European Banking Authority Report on Impact of Basel III Reforms
    04/08/2020

    The European Banking Authority has published two reports on the impact of the Basel III liquidity coverage ratio, as implemented in the EU, and the estimated impact of the Basel III credit and market risk, and credit valuation adjustment reforms, which are yet to be implemented by the EU. The reports are based on 2019 data that was collected prior to the outbreak of COVID-19.

    Read more.
  • Basel Committee on Banking Supervision Announces Further Measures to Alleviate COVID-19 Impact
    04/03/2020

    The Basel Committee on Banking Supervision has announced a series of measures designed to reduce the impact of COVID-19 on the global banking sector. The latest measures are designed to facilitate bank lending to the real economy and boost banks’ operational capacity to the financial strain of COVID-19. They follow the extension to Basel III implementation deadlines announced by the Group of Central Bank Governors and Heads of Supervision on March 27, 2020.

    Read more.
  • UK Prudential Regulator Welcomes Postponement of Basel III Implementation
    04/02/2020
    HM Treasury and the U.K. Prudential Regulation Authority have published a joint statement welcoming the delay to implementation of certain aspects of the Basel III regulatory reforms, announced by the Group of Central Bank Governors and Heads of Supervision. The GHOS has delayed the deadlines for introducing certain Basel III standards by one year until 2023 (or, in the case of the output flow, 2028). The Treasury and PRA intend to work together to produce a U.K. implementation timetable that is consistent with the GHOS’s delay.

    View the PRA's statement on the delayed implementation of Basel III.

    View details of the GHOS's delays to the implementation of Basel III.

    Details of other regulatory responses to COVID-19 are available at our COVID-19 Research Center.
  • European Banking Authority Guidelines on Treatment of COVID-19 Payments Moratoria
    04/02/2020

    The European Banking Authority has published guidelines on legislative and non-legislative moratoria on loan repayments applied in light of the COVID-19 crisis. The Guidelines state that, where payment moratoria are based on national law or a private-sector initiative broadly applied by credit institutions in response to COVID-19, they will not be classified as forbearance or distressed restructuring measures. 

    Read more.
  • Single Resolution Board Letter to Eurozone Banks on COVID-19 Relief Measures
    04/01/2020

    The EU Single Resolution Board has written to Eurozone banks about potential COVID-19 relief measures. It is united with the European Supervisory Authorities and national regulators in aiming to alleviate operational burdens on banks to enable them to deal with the COVID-19 crisis. The SRB intends to apply a pragmatic and flexible approach to 2020 resolution plans and MREL decisions and will consider postponing less urgent information requests where necessary. It does, however, confirm that Eurozone banks still need to submit the following reports: Liability Data Report, Additional Liability Report and MREL quarterly template.

    View the SRB's letter to Eurozone banks.
  • UK Prudential Regulator Statement on Bank Dividends and Bonuses in Light of COVID-19
    03/31/2020

    The U.K. Prudential Regulation Authority has published a statement supporting the decisions of the U.K.'s largest banks to suspend dividends and buybacks on ordinary shares until the end of 2020 and to cancel outstanding 2019 dividends. The PRA also makes it clear that it expects banks to refrain from paying cash bonuses to senior staff, including material risk takers. In parallel, the PRA has written to the CEOs of the largest U.K. banks (HSBC, Nationwide, Santander, Standard Chartered, Barclays, RBS and Lloyds Banking Group), notifying them of the PRA's expectation that they should not pay cash bonuses to senior staff.

    View the PRA's statement.
  • UK Prudential Regulator Publishes Capital Requirements Guidance for UK Firms in Light of COVID-19
    03/31/2020

    The U.K. Prudential Regulation Authority has published two statements addressed to U.K. firms on the application of certain requirements of the EU Capital Requirements Regulation.
     
    The first statement sets out the PRA's approach to calculating exposure under the internal models method for counterparty credit risk in light of the significant moves in counterparty credit risk exposures during the COVID-19 pandemic. Firms are reminded of their notification obligations in relation to any changes they make to their internal models method models as a result of the PRA's guidance.

    Read more.
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