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E U R O P E A N B A N K I N G A U T H O R I T Y
18
Reporting leverage
From 7 June to 27 August 2012, the EBA held
a consultation on ITS on supervisory report-
ing requirements for the leverage ratio. These
ITS aim at providing national authorities with
harmonised information on the leverage ra-
tio and its components using uniform report-
ing formats developed by the EBA. Such ITS
will become part of the general supervisory
reporting framework, and will serve at least
two purposes. Firstly, the leverage ratio will
be part of the supervisory review by national
authorities in order to assess the risk of ex-
cessive leverage in their institutions. Secondly,
the reporting framework will give the EBA the
ability to quantitatively assess the impact and
effectiveness of the leverage ratio, on which
the EBA is required to produce a report by
2016.
These ITS have been developed based on the
template used for the Quantitative Impact
Study (QIS) by the Basel Committee on Bank-
ing Supervision (BCBS) and on the COREP and
FINREP guidelines. To take into account that
the leverage ratio should apply to institutions,
which differ in size, nature and complexity, it
has been deemed necessary to apply the re-
quirements for more detailed reporting of the
components of the leverage ratio in a propor-
tionate manner. The scope and level of appli-
cation of these ITS are in line with the capital
requirements regulation (CRR) text.
On 20 December 2012, the EBA published a
feedback statement on the consultation of the
ITS which had attracted 24 responses. The fi-
nal draft ITS, including the legal text and the
updated templates and instructions, will be
published once the final CRR text enters into
force. However, limited changes are expected
to be introduced compared to the consulted
version of the ITS, primarily to reflect the
wording and definitions in the final CRR.
Awaiting the publication and the subsequent
implementation of the CRR, the EBA has been
collecting information on the leverage ratio
by means of a voluntary exercise, in order to
gather sufficient data and observation points
for its economic impact assessment. This vol-
untary exercise is based on the templates also
used in the monitoring exercise of the Basel
Committee on Banking Supervision (BCBS),
which have been adapted to accommodate
European specificities.
Governance and remuneration
In November 2012, the EBA published guide-
lines on the assessment of the suitability of
members of the management body and key
function holders. These guidelines set out the
process, criteria and minimum requirements
for assessing the suitability of those persons
and are ultimately aimed at ensuring robust
governance arrangements and appropriate
oversight. They also contain a notification re-
quirement and provide that in cases where a
member of the management body is not suit-
able, the credit institution and, if necessary,
the competent authority shall take appropri-
ate action.
In July 2012, the EBA issued guidelines on the
remuneration benchmarking exercise to en-
sure and facilitate a consistent collection of
data to benchmark remuneration trends and
practices at EU level and guidelines with re-
gard to the collection of data on staff earning
EUR 1 million or more p.a. (high earners). The
proposed CRD IV contains mandates for the
EBA to develop RTS aimed at setting the cri-
teria to determine the appropriate ratios be-
tween the fixed and the variable component of
the total remuneration, as well as at specifying
the classes of additional Tier-1 instruments
that appropriately reflect the credit quality of
the institution and the criteria to identify cat-
egories of staff whose professional activities
have a material impact on the institutions’ risk
profile. The EBA has started to develop the re-
spective draft regulatory standards, based on
the guidelines on remuneration policies and
practices and the experience gained with their
application. However, the political process
has brought about some changes to the CRD
IV initial proposal regarding the provisions of
remuneration, which need to be taken into ac-
count in the respective consultation papers
before they are published.
c. Keeping a robust and unified regulatory
policy in crisis times
In addition to work on the technical standards
mentioned above, the EBA published opinions
on some amendments introduced in the draft
CRR, notably concerning own funds. The EBA
voiced its concerns about some pro­posals
weakening the initial text of the Commis-
sion, and in some cases even leading to lower
standards than those currently applicable. Not­
ably, in November 2012, the EBA addressed a
technical opinion to the Cyprus Presidency of
the Council, the European Commission and
the European Parliament underlining the
need for harmonising the different methodol-
ogies currently being used for the calculation
of transitional floors and proposing the use of
a consistent method.