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E X E C U T I V E S U M M A R Y O F T H E A N N U A L R E P O R T 2 0 1 6
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Achievements in 2016
Playing a central role
in the development and maintenance
of the Single Rulebook for banking
In 2016, the Single Rulebook applicable to
the European Union (EU) banking sector was
largely completed. The European Banking
Authority (EBA) continued to engage actively
at the EU and international levels to support
the finalisation of the ‘Basel III package’ and
the completion of the implementation of the
Basel package in the EU. The year was also a
period for reflection on the regulatory reforms
that immediately followed the financial crisis,
to understand better the effects of the reforms
on bank structures, business models and risk-
taking, and the need to minimise complexity
where possible. The EBA also continued to
enhance its monitoring of different aspects of
the Single Rulebook, including on own funds,
remuneration practices and significant risk
transfers in securitisations.
EBA key deliverables in 2016
In August 2016, the EBA reported to the Com-
mission on a number of aspects related to the
leverage ratio (LR)
, in line with its mandate
laid down in the Capital Requirements Regu-
lation (CRR). One of the key questions ad-
dressed by the report is the Pillar 1 migration
of the LR and its minimum level, namely with
regard to business models and risk profiles.
The analysis, carried out in close cooperation
with competent authorities (CAs), suggests
that the potential impact of introducing an LR
requirement of 3% on the provision of financ-
ing by credit institutions would be relatively
moderate, while overall it should lead to more
stable credit institutions.
In September 2016, the EBA published a re-
port on a descriptive analysis of the
core
funding ratio (CFR)
across the EU. The report
highlighted a lack of correlation between the
CFR and the
net stable funding ratio (NSFR)
for the whole sample used and also by busi-
ness model and size bucket. Overall, the re-
port concluded that it would be misleading to
rely only on the CFR to assess banks’ fund-
ing needs because, unlike the NSFR, the CFR
does not look at the whole balance sheet of a
bank and, therefore, cannot fully assess a po-
tential funding gap.
In October 2016, the EBA and the European
Securities and Markets Authority (ESMA)
launched a joint consultation on guidelines
on the assessment of suitability of members
of the management body and key function
holders, and the EBA issued a consultation to
revise its guidelines on
internal governance
.
Both guidelines put more emphasis on the du-
ties and responsibilities of the management
body and on its responsibility when appointing
members of the management body to ensure
they have the reputation, knowledge, experi-
ence and skills necessary to safeguard a prop-
er and prudent management of the institution.