Insights

Prudential Regulation Review

January 2018

The New Year brought a number of significant regulatory developments. Andrea Enria, European Banking Authority (EBA), and Stefan Ingves, Basel Committee on Banking Supervision, spoke on the finalisation of Basel III. They both highlighted that the agreement in December was a major milestone. The EBA launched its 2018 EU-wide stress test and released the macroeconomic scenarios for the test. Also, the EBA finalised guidelines on uniform disclosure requirements for transitional arrangements for IFRS 9.

Key Highlights

  • The EBA published its Risk Dashboard for Q3 2017. It concluded that EU banks continued to strengthen their capital ratios; the ratio of non-performing loans (NPLs) kept a modest downward trend; profitability indicators have improved slightly; and the loan-to-deposit ratio for households continued to decrease.
  • The EBA launched its 2018 EU-wide stress test and released the macroeconomic scenarios for the test. It said that the adverse scenario implies a deviation of EU GDP from its baseline level by 8.3% in 2020, resulting in the most severe scenario to date. The EBA highlighted that it would publish the results of the exercise by 2 November 2018.
  • The EBA finalised guidelines on uniform disclosure requirements for transitional arrangements for IFRS 9. The guidelines covered, among other things, own funds, the risk-based capital ratio and the leverage ratio. The EBA made clear that competent authorities must notify it that they comply or intend to comply with the guidelines, or otherwise give reasons for non-compliance.

 

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Other topics covered

  • Capital 
  • Liquidity
  • Disclosure valuation and accounting
  • Deloitte Ireland Publication
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