On 23 January 2020, the PRA published Policy Statement 2/20: Pillar 2 Capital: Updating the Framework (PS2/20). In PS2/20 the PRA provides feedback to the responses to Consultation Paper 5/19: Pillar 2 capital: Updates to the framework, which set out refinements to the PRA buffer (also referred to as Pillar 2B). In its consultation the PRA made proposals in five areas: the hurdle rate in stress; buffer interactions and usability; the risk management and governance…

On 22 January 2020, the European Banking Authority (EBA) published a discussion paper on future changes to the EU-wide stress test. The proposed new framework comprises of two components owned by supervisors and banks respectively: the supervisory leg and the bank leg. The supervisory leg serves as the starting point for supervisory decisions and would be directly linked to the setting of Pillar 2 guidance. The bank leg allows banks to communicate their own assessment…

On 21 January 2020, the European Central Bank (ECB) published a letter from Andrea Enria, ECB Supervisory Board Chair, to significant institutions supervised under the Single Supervisory Mechanism (SSM) regarding variable remuneration policies. Additionally, the ECB has also published a recommendation (dated 17 January 2020) on dividend distribution policies. In the letter, the ECB reminds firms that it pays close attention to the remuneration policies of financial institutions under its supervision as such policies may…

On 19 January 2020, the Financial Stability Board (FSB) published its Global Monitoring Report in Non-Bank Financial Intermediation 2019. The report sets out the results of the FSB’s most recent annual monitoring exercise that assesses global trends and risks from non-bank financial intermediation (NBFI). It covers data up to end-2018 from 29 jurisdictions, which together represent over 80% GDP. The FSB’s monitoring exercise compares the size and trends of financial sectors in aggregate and…

On 20 January 2020, the European Central Bank (ECB) published a consultation on a draft ECB guideline that specifies how Member State national competent authorities (NCAs) shall exercise the discretion conferred on them under Article 178(2)(d) of the Capital Requirements Regulation (CRR) in relation to less significant institutions with regard to the threshold for assessing the materiality of credit obligations past due, irrespective of the method used for the calculation of their risk-weighted exposure amounts.…

On 17 January 2020, the European Securities and Markets Authority (ESMA) published a consultation paper on guidelines on securitisation repository data completeness and consistency thresholds. Article 10(7) of the Securitisation Regulation requires ESMA to define regulatory technical standards (RTS) on securitisation repository procedures to “verify the completeness and consistency of the information” that they receive. On 12 November 2018, ESMA published and submitted a final report on securitisation repositories technical standards, which includes a set…

On 16 January 2020, the European Banking Authority (EBA) published a report on the application by Member State competent authorities (NCAs) of the regulatory technical standards (RTS) on the criteria to identify categories of staff whose professional activities have a material impact on an institution’s risk profile. The review shows that, within the EEA, NCAs have properly applied the RTS during the reference period from 1 January 2015 to 31 December 2017. The report highlights…