Recent regulatory developments focusing on banking and finance. See also our General regulatory news of relevance to all financial institutions.
Contents
- COVID-19: PRA suspends guidance levels on fixed rate lending limits for non-systemic building societies
- Transposing BRRD II: FMLC responds to HM Treasury consultation
- COVID-19: EBA final draft ITS and guidelines on supervisory reporting and disclosures relating to CRR Amending Regulation
- CRR: EBA draft guidelines on criteria for the use of data inputs in the risk-measurement model under IMA
- SSM: ECB report on banks' ICAAP practices
- SRB operational guidance on bail-in playbooks and materials on bail-in data set
- Access to EU basic bank accounts: European Commission confirms no right to refuse based on location of consumer
COVID-19: PRA suspends guidance levels on fixed rate lending limits for non-systemic building societies
On 11 August 2020, the UK Prudential Regulation Authority (PRA) published a letter (dated 31 July 2020) sent from Mel Beaman, PRA Director, UK Deposit Takers, to the Chief Executive Officers (CEOs) of non-systemic building societies. In the letter, the PRA agrees to suspend, for an initial period of six months from 1 August to 31 January 2021, the relevant guidance levels on fixed rate lending limits in the Specialist Sourcebook. The letter responds to a suggestion by the Building Societies Association.
The PRA's only proviso is to limit any self-administered extension to 10% above the lower of the sourcebook benchmark or a building society's current limit, and boards are expected to carry out appropriate risk assessments (as detailed in Supervisory Statement 20/15) before making any change.
Building societies are asked to inform the PRA, after the event, of any changes they make, and provide to the FCA the relevant board minutes.
The PRA will review this dispensation before 31 January 2021.
Transposing BRRD II: FMLC responds to HM Treasury consultation
The Financial Markets Law Committee (FMLC) has published its response to HM Treasury's June 2020 consultation, on the UK's proposed approach to transposing the Bank Recovery and Resolution Directive (BRRD) II.
In its response, the FMLC highlighted some issues of legal uncertainty arising from HM Treasury's intention to diverge from EU law on those parts of BRRD II that will come into effect after the end of the Brexit implementation period.
COVID-19: EBA final draft ITS and guidelines on supervisory reporting and disclosures relating to CRR Amending Regulation
The European Banking Authority (EBA) has published the following final reports on draft implementing technical standards (ITS) and guidelines on supervisory reporting and disclosures relating to amendments to the Capital Requirements Regulation (CRR) made by Regulation (EU) 2020/873 (known as the Amending Regulation or Quick Fix Regulation):
The EBA has not consulted on these ITS and guidelines in the light of the urgency of the situation.
CRR: EBA draft guidelines on criteria for the use of data inputs in the risk-measurement model under IMA
The EBA has launched a consultation on draft guidelines on criteria for the use of data inputs in the risk-measurement model referred to in Article 325bc of the CRR under the Internal Model Approach (IMA) for market risk. These guidelines are part of the deliverables included in the roadmap for the new market and counterparty credit risk.
Institutions using the IMA to compute own funds requirements for market risk are required to compute the expected shortfall risk measure for those risk factors for which a sufficient amount of verifiable prices are available (modellable risk factors). The guidelines clarify the conditions to be met by the data related to modellable risk factors, which institutions should use in their expected shortfall calculations.
The consultation closes on 12 November 2020.
SSM: ECB report on banks' ICAAP practices
The European Central Bank (ECB) has published a report on banks' internal capital adequacy assessment process (ICAAP) practices. The report details the range of ICAAP practices observed in a sample of 37 banks and summarises the results of a structured analysis of ICAAP practices based on the ICAAP packages submitted by a representative sample of significant institutions in 2019.
SRB operational guidance on bail-in playbooks and materials on bail-in data set
The Single Resolution Board (SRB) has published the following documents to give operational guidance on bail-in playbooks and instructions and an explanatory note for the bail-in data set:
The SRB states that the documents are not a new set of SRB policies, but rather a guide to help banks ensure the required preparation for bail-in application during the resolution planning phase and to fulfil the SRB Expectations for Banks.
Access to EU basic bank accounts: European Commission confirms no right to refuse based on location of consumer
The European Parliament has published an answer from the European Commission responding to a written question on the extent to which Articles 15 and 16(4) of the Payment Accounts Directive and the Fourth Money Laundering Directive support the refusal of access to basic bank accounts and business bank accounts based on the customer's location in another member state.
The Commission confirms that the automatic refusal of an application by a consumer for a payment account with basic features on the ground of their residence in another member state is not in accordance with either Directive.
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