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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
6
Promoting convergence of supervisory
practices and ensuring their consistent
implementation across the EU
Own funds
has been the first area where the
EBA has developed a monitoring function,
after having finalised a large lot of technical
standards quite early after the adoption of the
CRR. In terms of CET1 capital, the EBA regu-
larly publishes a list of instruments that EU
banks have included in their CET1 capital. In
terms of AT1 capital, the EBA has now a long-
standing experience in assessing the regula-
tory terms and conditions of EU issuances. A
report presenting the results of this monitor-
ing and including the best practices observed
so far as well as clauses that should be avoid-
ed is regularly published. In October, the EBA
also published some standardised templates
for AT1 issuances.
Following the recommendations of the
Credit
Valuation Adjustment (CVA)
report published
in February 2015 and in order to partially ad-
dress the risks generated by EU exemptions,
in 2016, the EBA developed a coordinated ap-
proach for monitoring the impact of transac-
tions exempted from the CVA risk charge on
an annual basis.
The EBA is also continuously monitoring the
development of
remuneration
practices and
trends. In line with the Capital Requirements
Directive IV (CRD IV), the EBA annually col-
lects data on staff who have received a total
remuneration of EUR 1 million or more in the
previous financial year (high earners). In addi-
tion, detailed information is also collected in
particular on the remuneration of identified
staff from over 100 groups and institutions.
Both data collections aim to ensure a high lev-
el of transparency regarding the remuneration
practices across the European Union.
The EBA published a report in November 2016
to respond to a letter from the European Com-
mission requesting further information on the
EBA’s Opinion on the application of the
prin-
ciple of proportionality
to the remuneration
provisions in Directive 2013/36/EU. The report
provides an overview of the applicable frame-
work regarding the principle of proportionality
in each Member State showing a huge diver-
sity in regulatory frameworks and supervisory
practices.
The effective functioning of the single market
requires enhanced
convergence of supervi-
sory practices
of the CAs in all Member
States. The EBA continued to monitor the
practical application of the Single Rulebook by
CAs, mainly focusing on the consistency of
outcomes from the supervisory reviews. Like-
wise, the EBA kept engaging with colleges of
supervisors by promoting the consistent ap-
plication of Level 1 and Level 2 text, particu-
larly for the application of joint decisions on
capital, liquidity and recovery plans, and by
drawing supervisory attention to key risks and
themes such as non-performing loans, con-
duct issues and remuneration practices. In
addition, the EBA continued to assess the pro-
gress made in ensuring consistency of super-
visory reviews, evaluations and supervisory
measures in Member States.
Figure 1:
Promotion of convergence
+ + =
RULES AND THEIR
APPLICATION
COMPLIANCE
SUPERVISORY
PRACTICES
COMPARABILITY
SUPERVISORY OUTCOMES/
MEASURES
CONSISTENCY
CONVERGENCE