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Important Disclaimer: This document is provided for indicative informational purposes only. Although we have put

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exhaustive. Moreover this document may contain views or interpretations which may prove inaccurate. As a result

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RegWatch newsletter – September 2019 Contact the authors: Elena Atienza (elena.atienza@reacfin.com), Antoine Gustin (antoine.gustin@reacfin.com)

This month’s News

Go to [CRR/CRD] [IORP2] [STS Framework] [IFRS] [Others] [ Acronyms List]

CRR/CRD [Go to top]

05/09/2019 The BNB announces its intention to introduce new prudential requirements for the

origination of mortgage loans on the Belgian market, following concerns that credit

origination conditions in this sector have again deteriorated. The BNB states that “the

macroprudential measure should be finalized in the coming weeks and apply from 2020”.

See the BNB's press release concerning the introduction of new control measures for

mortgage origination [FR]

09/09/2019 The EBA announces its intention to provide clarity on the adequate treatment of legacy own

funds instruments, which do not comply with CRR requirements but beneficiate from a

grandfathering period until 31 December 2021. Interactions with similar transition

provisions introduced by the recently endorsed Banking Package (CRR2/CRD5) are also to be

clarified. The EBA aims at communicating on this subject by mid-2020.

See the EBA press release on the prudential treatment applicable to legacy instruments

02/10/2019 The EBA publishes its Basel III monitoring report. Results show that EU banks Tier 1 capital

requirements would increase by 19.3% at full implementation (2027), with the main drivers

being the output floor (+ 5.4%), operational risk (+ 4.7%) and CVA (+ 4.0%) frameworks. The

required increase in Tier 1 capital is larger for G-SIIs (27.1%) and smaller for small/medium

banks (T1 capital less than EUR 3bn, 10.5% increase).

Note that this report’s scope is different from that of the advice published on 5 August 2019.

See EBA's Basel III monitoring exercise report and the related EBA press release

02/10/2019 The EBA publishes a report on the current implementation of liquidity measures in the EU

banking sector. Results show that the LCR was 149% on average at end-December 2018,

thanks to an increase in HQLA holdings and stable liquidity outflows over the preceding

period. The average LCR is mainly driven by G-SIIs (145%) and O-SIIs (144%), while other

banks display a higher LCR on average (183%). However, important differences exist in LCR

levels between EU countries.

See EBA's report on the implementation of liquidity measures in the EU banking sector

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IORP2 [Go to top]

13/09/2019 The FSMA publishes a draft regulatory paper on prudential reporting measures for IORPs for

consultation. The paper also concerns reporting obligations of the FSMA and BNB to the

EIOPA and ECB. The consultation runs until 15 October 2019.

See the FSMA's press release on the consultation paper for IORPs reporting rules [FR]

STS Securitization Framework [Go to top]

04/09/2019 The EBA updates its interactive Single Rulebook Q&A with the STS Securitization Regulation

(EU) 2017/2402

See the EBA's Interactive Single Rulebook

25/09/2019 The EBA publishes a Discussion Paper concerning the potential application of the STS

framework to balance sheet synthetic securitization (i.e. excl. arbitrage synthetic

securitization). The report sets out various STS criteria for such transactions, including

synthetic-specific ones. The possible introduction of a differentiated regulatory treatment of

the STS synthetic securitization is also discussed. The Paper is open for public consultation

until the 25 December 2019.

See the EBA Discussion Paper on STS framework for synthetic securitization and the related

EBA press release

IFRS Standards [Go to top]

26/09/2019 IASB issues BMR-related amendments to IFRS 9 (Financial Instruments), IAS 39 and IFRS 7

(Financial Instruments: Disclosures). The amendments target specific hedge accounting

requirements, so that concerned entities assume the IBOR reform has no impact on the

interest rate benchmark when applying these specific requirements.

See IASB's press release on BMR-related amendments to IFRS standards

Others [Go to top]

28/08/2019 The EBA publishes its annual report on EU banks’ funding plans and asset encumbrance.

Banks’ total assets are expected to grow by 6.1% on average over the next 3 years,

chiefly due to increased loans to households and non-financial corporates

Funding plans include increased debt issuances in 2020 and 2021, among others

driven by the recently endorsed BRRD2 directive

See the EBA report on asset encumbrance (Aug. 19) and the EBA report on funding plans

(Aug. 19)

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04/09/2019 The EC calls all EU citizens and businesses to prepare for a no-deal brexit on 31 October

2019 and publishes a brexit-preparedness checklist for businesses

See the EC's call for preparedness ahead of the no-deal brexit

06/09/2019 The UK Parliament issues three new brexit-related statutory instruments, respectively

ensuring that CRR2, PSD2 and the Prospectus Regulation remain active in the UK in the

event of a no-deal brexit.

See Norton Rose Fulbright's article on the new brexit statutory instruments

12/09/2019 The Joint Committee of ESAs publishes its Autumn 2019 Risk Report. Key identified threats

to stability are the uncertainty around brexit, the persistent low-rates environment, and the

changes in business models spurred by the transition to a more sustainable economy

See the ESAs Joint Committee Autumn 2019 Risk Report

16/09/2019 Christine Lagarde is appointed as president of the ECB by the EU Parliament

23/09/2019 EBA launches its 2019 EU-wide transparency exercise

See the related EBA press release

04/10/2019 The EBA publishes its Q2 Risk Dashboard. “Capital ratios have remained broadly stable and

banks' asset quality has further improved. However, low profitability keeps on being a key

challenge for the sector.”

See the EBA Risk Dashboard Q2 update

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List of acronyms used in this issue [Go to top]

BMR Benchmark Regulation

BRRD Directive 2014/59/EU (Bank Recovery and Resolution Directive)

CRD Directive 2013/36/EU (Capital Requirements Directive)

CRR Regulation (EU) No 2013/575 (Capital Requirements Regulation)

CVA Credit Valuation Adjustment

EBA European Banking Authority

EIOPA European Insurance and Occupational Pensions Authority

ESAs European Supervisory Authorities

EU European Union

FSMA Financial Services and Markets Authority (Belgium)

G-SII Globally Systemically Important Institution

IASB International Accounting Standards Board

IBOR Interbank Offered Rate

IFR Investment Firms Regulation

IFRS International Financial Reporting Standard

IORP Institutions for Occupational Retirement Provision

SII Systemically Important Institution

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