Prudential Regulation Review November 2017

Insights

Prudential Regulation Review

November 2017

In November there was a particular focus on the issue of non-performing loans (NPLs) in the European banking sector, with Danièle Nouy highlighting this issue as part of her opening remarks at a public hearing, and Sabine Lautenschläger saying that NPLs are probably the single biggest challenge and a drag on the entire European economy.

Key highlights

  • The European Banking Authority (EBA) published guidelines on the prudential supervision of significant branches within the EU, while the European Central Bank (ECB) published a paper on developing macroprudential tools for alternative investment funds. 
  • The EBA also announced the final timeline for the 2018 EU-wide bank stress test, with the final methodology also published in November.
     
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Other topics covered

  • Capital (including macro-economic issues and stress testing)
  • Liquidity
  • Conduct of Business (including MiFID)
  • Crisis management (including special resolution, systemically important firms, and business continuity)
  • Regulatory Perimeter
  • Rethinking the domestic and international architecture for regulation
  • Information security and data privacy
  • Central Bank of Ireland

EU bank capital negotiations: Update on CRD5/CRR2 latest progress

Negotiations in Brussels are making important progress on the European Commission’s ‘CRD5/CRR2’ bank capital and liquidity package (including amendments to the BRRD).

The proposed legislation implements important components of Basel III, TLAC, the NSFR and the FRTB into EU law, but excludes most of the package of Basel reforms that was agreed on 7 December by the Basel Committee on Banking Supervision (BCBS) (i.e. SA credit risk, IRB constraints, operational risk, and standardised output floors) sometimes referred to as ‘Basel IV’.

This note updates on the key points of debate that we understand have emerged in the EU’s CRD5/CRR2 negotiations in the last two months, and our views on the next steps as it progresses towards becoming law.

EMEA Centre of Regulatory Strategy

If you would like to contact a member of the EMEA Centre for Regulatory Strategy then please click on the below links:

Rod Hardcastle - Director, Centre for Regulatory Strategy UK

John Andrews - Senior Manager, Centre for Regulatory Strategy UK

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