Advocating for a global level playing field for banks, the European Banking Federation’s Pillar III Working Group meets on a regular basis to discuss disclosure requirements of banks at global and European level. It delivers well-informed advice to strike the right balance between transparency, simplicity and understandability of public disclosure efforts by banks.
This spring, the EBF Pillar III working group gathered for the seventh time, after four years, at the EBF Brussels offices. The group discussed the European Commission’s recent consultation on Pillar 3 disclosure requirements. Members elaborated their current concerns on introducing the so called standardised approach as a benchmark to calculate risk-weighted assets. Other matters of interest were the implementation of new templates, issued by the Basel Committee, for asset encumbrance as well as credit distribution constraints. While the group agrees with several proposed amendments made to the templates. However, the group expressed recurring doubts about some specific requirements that could impact the level playing field for banks and affecting the comparability of their public information. With the deadline of 26 May, the EBF will finalise together with its members the response to the consultation in the following weeks.
Banks and banking associations represented in the Working Group include the Finnish, French and German banking associations, and HSBC, Deutsche Bank, BBVA, Intesa Sanpaolo.
EBF positions and communucations coming out of this working group will be published on this page.
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]]>There is a specific issue in the way bank assets in Europe are valuated. An issue that is blocking the further digital transformation and growth of banks.
Current prudential rules prescribe that the use of banking software is penalised instead of incentivised. Software is still valuated as an intangible asset, making it less worthy than basic office furniture.
In other words, EU banking rules treat software as a cost rather than an investment. Unlike in the US, European banks are forced to cover expenditure on software solutions with the same amount of capital.
Investing in software solutions, updates and development is crucial to remain competitive and to strengthen cybersecurity.
A recent survey conducted by EBF shows that European banks as of 2016 had invested more than €18 billion in software, despite the costly conditions in place.
Without a doubt, financial technology and software solutions have become critical functions of the work in banking.
Even in case of a liquidation, when bank assets are sold, software can still be used and thus proves its value.
If we want to let banks innovate, and therewith the European economy, treating software as an ordinary asset is a pure necessity.
Former MEP Cora van Nieuwenhuizen at the 2017 European Banking Summit:
Remarks by Gonzalo Gasos at the QED Banking Package Review event:
Subscribe to the EBF Weekly + FinReg Agenda
Every Friday at noon you can receive the EBF Weekly + Financial Regulation Agenda. This agenda presents an overview of upcoming European and international meetings and conferences in financial regulation, as well as important general financial and economic events and key EBF meetings for the week ahead. CLICK HERE TO SUBSCRIBE
Subscribe to the EBF Morning Brief
The EBF Morning Brief is published Monday through Friday morning and brings you the top banking headlines, relevant announcements from the EU institutions and the latest from the EBF and its members, national banking associations in 32 countries in Europe. CLICK HERE TO SUBSCRIBE
The post Prudential treatment of software: the use of software by banks should be encouraged not punished appeared first on EBF.
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