5 YEARS STRENGTHENING THE

EU BANKING SECTOR

5 YEARS OF RULE‑MAKING AND SUPERVISORY COORDINATION FOR MORE EFFICIENT, TRANSPARENT AND STABLE BANKING IN THE EU.
FINANCIAL INNOVATION AND PAYMENTS
Consumer confidence in banking products drives opportunities for growth. The EBA ensures that consumers in the banking sector are treated fairly and in the same way across the entire EU, that innovation is monitored and assessed for benefits and risks and that retail payments in the EU are secure, easy and efficient.
Efficient financial innovation in the EU should not be detrimental to consumers of financial products and services offered by payment institutions, e‑money issuers and mortgage credit providers. The consumer protection issues tackled by the EBA are wide and cover the pre‑sale, point‑of‑sale and post‑sale stages of the interaction between a consumer and a financial institution:
  • risk and benefit assessments of innovations such as virtual currencies, crowdfunding and automation in financial advice
  • product oversight and governance arrangements to bring EU‑wide consistency in banking products and how they are marketed and tested
  • setting consumer‑friendly requirements for packaged retail and insurance‑based investment products
  • defining remuneration policies for staff selling financial products;
  • setting criteria for creditors to assess the creditworthiness of mortgage borrowers and for handling their possible arrears
  • passporting notifications for mortgage credit intermediaries and payment service providers
  • ensuring the security of internet payments
  • requirements for the separation of payment card schemes from their processing entities
  • procedures for handling complaints
COMMON PRACTICES FOR SUPERVISING EU BANKS
As the regulatory basis of the single market in EU banking, the Single Rulebook needs to be applied consistently by banking supervisors. The EBA ensures a common EU culture of banking supervision is in place and fully understood, so that banking supervisors can achieve consistent supervision in the EU banking sector.
The EBA strives for convergence of supervisory practices in the application of the Single Rulebook. It achieves this by defining supervisory methodologies, mediating disagreements, fostering best practices, delivering training, coordinating the cross‑border supervision of banking groups operating in more than one EU Member State and facilitating colleges of EU banking supervisors.

Since 2011, the EBA has:
  • created the EU Supervisory Handbook defining best supervisory practices in EU banking
  • guided and overseen supervisory colleges in joint decision‑making processes
  • issued methodologies
  • supported supervisors in assessing their banks’ recovery plans
  • provided training sessions on EU supervisory practices (14 in 2014 and 17 in 2015)
  • facilitated seven cases of binding and non‑binding mediation so far
  • assessed the confidentiality standards of non‑EU supervisory authorities
  • conducted peer reviews of best supervisory practices across the EU
  • engaged with resolution authorities and resolution colleges
Common rules for eu banking
The EBA supports the objectives of the Single market in the EU by drafting a single and harmonised set of rules in the form of a Single Rulebook which is applicable to the entire EU banking sector.
As the regulatory infrastructure underpinning the EU single market in banking, the Single Rulebook is the prerequisite for ensuring consistent regulation and oversight of credit institutions and investment firms in the EU.

The regulatory work of the EBA stems from the so‑called “level 1” legislation: the Directives from which it draws its mandate.

Since 2011 the EBA has delivered:
RISK ASSESSMENT AND DISCLOSURE
Since the financial crisis of 2010, the EU banking sector has achieved major progress in terms of repair. EBA activities, such as its EU‑wide stress tests, contributed to the significant capital strengthening of EU banks. Thanks to their improved capital positions they are now able to extend lending to the real economy in the EU. Also, the data disclosed by the stress tests has allowed market participants from across the world to access more and comparable information on EU banks.
The EBA’s EU‑wide stress tests ensure that banks are solid and resilient to external shocks. By carrying out stress tests and recapitalisation exercises, the EBA has brought EU banks’ capital ratios to levels comparable to their US peers: the average common equity Tier 1 ratio was 12.8% in June 2015, up from 9.7% in 2011.

Significant efforts have also been made to increase transparency, the endeavours of which are obvious when comparing the amount and quality of information on EU banks available five years ago and today. The EBA website provides the public, world‑wide, with risk reports and dashboards, bank‑by‑bank outcomes of EU‑wide stress tests, quantitative information on EU systemically important institutions, and detailed data on risk parameters used for risk‑weighted assets calculations.