Page 57 - EBA 2015.1815 Annual report 2014 web 2

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2 0 1 4 a n n u a l r e p o r t
on the content and articulation of key delivera-
bles. EBA guidance on thematic topics like the
AQR and stress test was also well received. (
Key deliverables
The EBA monitored the quality of the joint risk
assessments and joint decision processes for
capital and liquidity. Colleges experience over
the past few years on the process for the joint
risk assessment and decision on capital is re-
flected in the quality of these documents, and
in the reasonable consistency between the risk
assessments and the joint decision proposals.
2014 was the first year for EU colleges to reach
the joint decision on liquidity. In early 2014,
the EBA published a discussion paper with
the draft methodology for assessing liquidity
and funding risks under the SREP framework
to support competent authorities in this new
task. The final methodology has been incor-
porated into the SREP guidelines published at
the end of 2014 (see Box 3).
The outcomes of the joint decisions on liquid-
ity have been rather varied with regards to
the liquidity measures, due, not only to the
differences in liquidity risk profiles, but also
due to the use of different national method-
ologies for quantifying liquidity risk. A number
of shortcomings were found in the processes,
however, and in future the LCR framework and
the SREP guidelines should contribute to a
more consistent approach. The EBA intends to
continue working closely with competent au-
thorities to assist them in implementing these
policy products.
Equivalence of third countries
The EBA activated work on equivalence in
2014, beginning with the assessment of equiv-
alence of professional secrecy and confidenti-
ality provisions of third countries’ supervisory
authorities. This work will result in recom-
mendations which will inform relevant opin-
ions of supervisory college members on third
countries allowing for a consistent treatment
of third countries when determining which au-
thorities can be invited to the supervisory col-
leges, according to Article 116(6) CRD.
) Box 6 on p.68
The EBA’s review of cross border banks’
critical functions and core business
In 2014, in anticipation of the legal implemen-
tation of BRRD, the EBA intensified its efforts
to contribute to the development and coordi-
nation of effective and consistent recovery and
resolution planning across Europe.
The EBA undertook a comparison exercise
of 27 European cross-border banking groups
— accounting for approximately half of EU
banks’ total assets — focusing specifically
on how credit institutions assessed Critical
Functions (CFs) and Core Business Lines
(CBLs) in their recovery plans. The review
identified substantial variation across bank-
ing groups in terms of the overall approach to
identification with some room for further im-
provement in particular for defining critical
functions. The findings were communicated
to competent authorities to support their as-
sessment of recovery plans and to resolution
authorities to assist them in the context of
their resolution planning. A synopsis of the
analysis will also be published for the benefit
of credit institutions.
The EBA’s engagement with Resolution
The EBA continued to attend all Crisis Man-
agement Groups (CMGs) meetings for major
banking groups contributing to the resolution
planning discussions focusing, in particular,
on the cooperation aspect across competent
authorities for the purpose of promoting su-
pervisory convergence in this field.
To provide support to resolution authorities in
their establishment phase, the EBA conducted
a survey with established resolution authori-
ties on certain organisational aspects (opera-
tions, resourcing and financing) with regard to
setting up those respective national resolution
authorities. The survey results were shared
amongst competent authorities and provided
useful benchmarking information and emerg-
ing trends in Member States. In addition, the
EBA, in conjunction with the SRB, held a semi-
nar in December 2014, targeted at resolution
authorities entitled ‘Establishing Resolution
Authorities & Resolution Planning’. The event
provided a snapshot of current developments
on the establishment of resolution authorities