Speech by EBF Head of Banking Supervision Gonzalo Gasosz
Ljubljana, 29 May 2019
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AS PREPARED FOR DELIVERY
EBF Head of Banking Supervision Gonzalo Gasos with Slovenian winners of the 2019 European Money Quiz finals
Thank you, Stanislava Zadravec Caprirolo, for your invitation to participate in the Banking Conference of the Bank Association of Slovenia. I am pleased to visit Slovenia, also because it is a country with a keen interest in finance. That became obvious in the European Money Quiz, the financial literacy competition that we organise annually in the European Banking Federation with the participation of more than one hundred thousand students from across the EU. Two teenagers from the Slovenian team were placed first in the second edition last month. My deepest congratulations!
The last time I was in Ljubljana was in 2010 when I gave a presentation in the program on home-host cooperation. Rereading my slides, I realise how much the supervisory architecture has changed towards a European model and how little the banking system has moved from its national based model since then. In 2010, the first steps of the European System of Financial Supervisors were being taken. I claimed in my presentation that further bank consolidation would contribute to the Single Market’s integration and that we all should encourage the emergence of cross-border banking groups.
– This will be the first topic of my speech, the longstanding cross-border ambition in European banking and supervision;
– Secondly, I will raise some facts about the supervision of banks as businesses in the new regulatory framework;
– Number three, I would like to assess the interaction between regulation and supervision;
– Finally, I will refer to the role of the internal assessment of banks as the place where business and supervision come together, offering an opportunity to conduct business-conscious oversight in the post-regulatory reform era.
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]]>EBF adviser: Saif Chaibi
Publication date: 31 January 2018
Key points:
- The EBF supports this general review of the Supervisory Review and Evaluation Process (SREP) guidelines since it would enhance the current framework improving clarity on certain aspects and ensuring greater harmonization. In this sense, the clarifications on the Pillar 2G and the link between other supervisory activities and the SREP decisions are welcomed.
- We appreciate EBA’s efforts to improve proportionality and recommend adapting all aspects of the Guidelines to the proportionality principle. It is important that the SREP process reflects differences in size, complexity and business models.
- Transparency must be ensured regarding the use of peer groups, these should be explicitly communicated to institutions, including the methodology for their constitution. Entities must be able to understand their relative positioning which is a key information for a total understanding of their SREP assessment.
- The benefits of diversification are not adequately recognized in the guidelines, both between risks and across geographies. We consider the approach to Pillar II should not be just a Pillar I plus some add-ons, but a comprehensive overview of the risk profile of an institution.
- The EBF welcomes the efforts undertaken in order to ensure transparency in relation to the methodology of computation of the Pillar 2 Guidance and the clarification provided in relation to its link to relevant supervisory stress tests. Notwithstanding this, EBA must specify how results of supervisory stress tests are used to determine P2G and provide more detailed, quantitative explanations on the inclusion of stress test results in P2G.
- The EBF recommends to EBA to specify that P2G disclosure should not be required by local authorities under any circumstances. concerns arise from the possibility that local market authorities may require the disclosure of P2G which has no relevance for the Maximum Distributable Amount. This may create disclosure pressure across the markets and possibly make the requirement binding.
- The EBF opposes the requirement that imposes on institutions to meet their P2G requirement only with CET1 instruments. Institutions must be allowed to use other instruments to meet their P2G requirements such as AT1 and T2 capital instruments. On the other hand P2G should also be used to cover a AT1 or T2 shortfall. This is supported by the definition of the stacking order.
- Overlaps between P2G and other applicable macro-prudential measures should be avoided. In this sense, competent authorities should consider the extent to which the existing combined buffer requirements and other applicable macro-prudential measures already cover risks revealed by stress testing. The P2G should in general be offset against the capital conservation buffer and in some cases the countercyclical capital buffer.
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]]>Publication date: 11 March 2016
General Comments
The EBF welcomes the EBA consultation paper on Guidelines (GL) on ICAAP and ILAAP information collected for SREP purposes. The guidelines provide useful additional insight on supervisory expectations regarding the content of ICAAP/ILAAPs and how National Competent Authorities (NCAs) expect firms to demonstrate their adherence to capital and liquidity adequacy standards. Having detailed guidance on the required content of an ILAAP and ICAAP is vital to ensuring the consistency and comparability of ILAAPs and ICAAPs, allowing supervisors to consistently assess their reliability. Furthermore, we welcome the fact that the EBA draft guidelines on ICAAP and ILAAP information collected for SREP purposes recognise that the ICAAP and ILAAP are internal processes. We would like to emphasise the need to maintain the ability for banks to have a flexible approach to their capital planning.
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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
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