Blog: Financial Services Regulation and Compliance – Banking May 2022 – Lexology


Retail bank CEO roundtable

On 17 May 2022, the Central Bank of Ireland (CBI) met with the CEOs of the five main retail banks in Ireland to discuss the large scale migration of customer bank accounts, and the actions necessary to ensure this activity happens in line with customer needs and expectations. Agreement was reached on the delivery of a strong customer focused approach. The following areas are identified as requiring more work to be done:

  • better planning – the need for the sector to collaborate on a collective approach with agreed timelines and joined up planning across all institutions
  • customer focused arrangements – taking into account the specific circumstances a customer may face and strongly support them in making the move
  • proactive communication – so that customers can understand the banks processes, including how and when key customer facing decisions will be made
  • system wide engagement – the need for an inclusive forum where the banks engage as a group with the other actors and stakeholders in a way that is purposeful and enables problems to be anticipated and solved

Retail banking review public consultation

On 16 May 2022, the Department of Finance launched a public consultation on the Retail Banking Review. The consultation focuses on retail banking services used by Irish consumers and SMEs. The consultation seeks general stakeholders’ views on the following topics and changes which have occurred in the Irish market:

  1. competition
  2. branch services
  3. cash services
  4. credit products and services, including mortgages and SME credit
  5. current, deposit and savings accounts
  6. other operational challenges for banks including capital and climate considerations

The consultation will run until 8 July 2022.

Updated information on the credit institution charges approval process

On 13 May 2022, the CBI published the updated information on the section 149 charges approval process. The updated document includes details on the updated notional activity customer profiles CBI uses to assist in assessing section 149 notifications and reflects the updated definition of ‘credit institution’ in section 2 of the 1995 Act, following the enactment of the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022.

COVID 19 – Prudential regulatory flexibility measures: credit institutions directly supervised by the CBI

On 3 May 2022, the CBI updated the COVID 19 prudential regulatory flexibility measures for credit institutions directly supervised by the CBI. The updates include:

  • CBI will no longer permit credit institutions to operate below the level of capital defined by their P2G beyond 31 December 2022
  • no extension of supervisory measures that allowed credit institutions to exclude central bank exposures from their leverage ratios
  • CBI expects all credit institutions under its direct supervision to comply with the general LCR minimum level of 100% as of 1 January 2022
  • the relief measures regarding credit institutions’ leverage ratio expired on 31 March 2022


EBA announces timeline for the 2022 EU-wide transparency exercise and EBA Risk Assessment Report

On 25 May 2022, the EBA announced it will be launching its annual 2022 EU-wide transparency exercise in September 2022 and expects to release the information on banks’ exposures and asset quality at the beginning of December 2022, along with the EBA Risk Assessment Report. The exercise will cover the figures from the second half of 2021 and the first half of 2022.

EBA updates mapping between technical standards on Pillar 3 disclosures and technical standards on supervisory reporting

On 24 May 2022, the EBA published an updated mapping between quantitative disclosure data points and the relevant supervisory reporting data points. The updated mapping supports institutions in fulfilling their disclosure obligations and responds to the recommendations and issues raised by competent authorities and the industry. The updated mapping applies to the reporting framework 3.0 and the implementing technical standards (ITS) on institutions’ Pillar 3 public disclosures.

EBA publishes final technical standards to identify shadow banking entities

On 23 May 2022, the EBA published its final draft regulatory technical standards (RTS) specifying the criteria to identify shadow banking entities (SBEs) for reporting large exposures. Undertakings included in the consolidated supervision of an institution are out of scope of these final draft RTS.

The final draft RTS clarify that entities carrying out banking activities or services which have been authorised and supervised in accordance with the EU prudential framework, shall not be considered as SBEs. Central clearing counterparties (CCPs) will also not be identified as SBEs when only performing clearing as defined in Article 2(3) of Regulation (EU) No 648/2012 (EMIR).

For entities established in a third country, the final draft RTS differentiate between institutions and other entities:

  • Institutions are not identified as SBEs provided they are authorised and supervised by a supervisory authority that applies banking regulation and supervision based on at least the Basel core principles for effective banking supervision.
  • Other entities are not identified as SBEs provided they are subject to a regulatory regime recognised as equivalent to the one applied in the Union for such entities in accordance with the equivalence provisions of the relevant Union legal act.

The final draft RTS will be submitted to the European Commission for endorsement following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union.

EBA report on convergence of supervisory practices for 2021

On 11 May 2022, the EBA published its annual report on convergence of supervisory practices for 2021. The report found competent authorities made progress in the implementation of the supervisory review and evaluation process. The report also found consistent implementation into their supervisory practices of the key supervisory priorities for 2021. However, the report flagged areas for improvement, such as ICT risks, namely cyber risk and business model challenges and the respective digital transformation. In addition, the report highlights the need for more harmonised practices in the determination of capital add-ons.

The core of the supervisory attention in 2021 focused on the key topic of capital and liability management and asset quality and credit risk management. The ICT and security risk, operational resilience, as well as profitability and business model, received overall less supervisory attention compared to the other two topics. The report noted room for further convergence in the use of internal capital adequacy assessment, the consistent treatment of risks across the EU and the setting of the Pillar 2 guidance.

EBA updates technical standards in view of its 2023 benchmarking of internal approaches

On 5 May 2022, the EBA published its final draft implementing technical standards (ITS) which specify the data collection for the 2023 benchmarking of internal approaches used in market and credit risk and IFRS9 accounting. The updated ITS include all benchmarking portfolios and metrics that will be used for the 2023 exercise.

For market risk, in order to keep the exercise informative, the data collection is extended to include the collection of new instruments and portfolios, in particular those recently applied by the industry. These new instruments are also accompanied by a more logical use of instruments references numbering in Annex V.

For credit risk, minor changes were made to the benchmark portfolios and no changes to the data fields for reporting purposes. Minor clarifications are provided in the instructions in Annex IV on how to deal with changes in the definition of default.

No changes have been made to the IFRS 9 templates.

The draft ITS will be submitted to the EC for endorsement before being published in the Official Journal of the European Union (OJEU). The ITS will apply 20 days after publication in the OJEU.

EBA consults on standardised information requirements to support sales of non-performing loans

On 16 May 2022, the EBA launched a public consultation on the draft ITS specifying the requirements for the information that sellers of non-performing loans (NPL) shall provide to prospective buyers, seeking to improve the functioning of NPL secondary markets. The objective of the draft ITS is to provide a common standard for the NPL transactions across the EU enabling cross-country comparison and thus reducing information asymmetries between sellers and buyers of NPL. The consultation is open until 31 August 2022.

A public hearing on the draft ITS will also take place online on 15 June 2022.

Sanctions imposed in response to the crisis in the Ukraine

Since February, the EU imposed a number of sanctions in response to the crisis in the Ukraine. Given that the crisis is developing and sanctions are continuing to evolve, the CBI is publishing details of new restrictive measures/sanctions that are adopted in this regard, as well as any associated EU/UN guidance, on their dedicated webpage.

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