Page 94 - EBA 2015.1815 Annual report 2014 web 2

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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
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the EBA’s Single Rulebook, the main objec-
tive of this RTS is to promote harmonised
practices on prudential consolidation across
EU Member States and to ensure that the
appropriate consolidation method is applied
for prudential purposes in order to reflect in
a comprehensive manner the risks that a fi-
nancial institution may be exposed to from its
relationship with other entities.
Enhancing supervisory
convergence
In 2015, supervisory convergence will continue
to be an area of focus for the EBA. For the
Single Market to function smoothly, enhanced
convergence of regulatory and supervisory
practices amongst competent authorities is
needed. The development of the Single Rule-
book by the EBA is the basis for convergent
supervisory practices; however divergent
practices still exist and pose a potential risk
to the effective functioning of cross border
groups and the advancement towards a level
playing field.
The EBA’s mandate on convergence of super-
visory practices is outlined in its founding reg-
ulation and Article 107 of Directive 2013/36/EU
which includes a specific mandate for the EBA
on promoting consistency of supervisory re-
views, evaluations and supervisory measures
in Member States.
The EBA interprets supervisory convergence
as a process for achieving comparable su-
pervisory practices in Member States which
lead to a consistent application of Union rules
and consistent supervisory outcomes. In this
context the EBA will devote resources to the
following areas to promote supervisory con-
vergence:
1) Policy tools
The EBA will focus on further developing
the Supervisory Handbook and supporting
supervisory understanding and implemen-
tation of the common SREP framework
and guidelines in national practices. In
particular on the latter, the EBA will look
into the areas of supervisory benchmarks
aimed at helping competent authorities
in determining additional capital require-
ments for various risks and elements of
risks covered by the SREP guidelines.
In addition, the EBA will provide further
guidance on how to address some spe-
cific risks in SREP, including excessive
CVA risk and information technology risk.
Furthermore, revising the stress testing
guidelines is also a key task for 2015 to
improve institutions’ stress testing capac-
ity and to converge the supervisory stress
testing framework where currently there is
disparity in the use of buffers and stress
test outcomes. To do this, it is necessary
to describe a common language and to
facilitate a common approach on the link
between Pillar 2 buffers and stress testing.
2) Training
Training of supervisors is a high prior-
ity for driving supervisory convergence. In
this respect, the EBA will deliver training
for supervisory authorities on the func-
tioning of supervisory colleges; on the
assessment of recovery plans and joint
decisions on group recovery plans; on the
SREP process and methodology for the
assessment of risks and also, mainly for
resolution authorities, on resolution plan-
ning and functioning of resolution colleg-
es. Such training will facilitate a common
understanding amongst supervisors, en-
hanced skills and coordinated approaches
across Member States.