Briefing Notes

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Green Economy

Briefing Note

Sustainable Finance

During 2019/2020, the UK and EU introduced multiple climate documents to embed sustainable finance into financial systems to assist in the transition to a climate-neutral economic area. The objective of this short paper is to summarise key current documents, followed by an overview of upcoming guidance.

Briefing Note

IBOR Transition: Avantage Reply's Offering

In 2017, the Financial Conduct Authority (FCA) announced that it would cease to compel banks to submit their input rates for the computation of the London Inter-Bank Offered Rate (LIBOR) starting from the end of 2021. The latter has led the Financial Sector to a consensus around structurally different replacement rates that would provide a get-around to the main limitations that led to the discontinuity of LIBOR’s.

ICAAP

Briefing Note

ECB report on bank's ICAAP practices

Since the establishment of the Single Supervision Mechanism (SSM) under the European Central Bank’s (ECB) mandate, banks directly supervised by the ECB are required to submit an Internal Capital Adequacy Assessment Process (ICAAP) package on an annual basis. This submission is aimed at demonstrating the robustness of banks’ internal processes in relation to the identification, assessment and measurement of their risk profile and the availability of sufficient capital to support their risk profile.

Covid-19

Briefing Note

ECB COVID-19 Reporting

The ECB has mandated a new reporting exercise in the light of the COVID-19 crisis in an effort to ensure the timely and consistent monitoring of the risks sparked by the outbreak and to widen the scope beyond the SREP STEs, FINREP and COREP, through the inclusion of credit moratoria and state guarantees figures. The reporting shall be submitted to NCAs on a monthly basis until at least December 2020, and is expected to raise several implementation challenges for SIs on the organizational and operational levels (including capacity and data aggregation issues).

ESG

Briefing Note

Environmental, Social and Governance in Investment and Banking

A growing number of stakeholders, from governments to individuals, pension funds and asset managers, have realised that the application of ESG criteria is in line with their financial objectives. Around the world, investment strategies based on sustainability criteria are growing to become a new service line tending to the needs of the stakeholders: supervisory bodies, financial institutions and all customers.

Covid-19

Briefing Note

Financial Institutions & SSM Supervision: what can we expect following the Covid-19 crisis?

This opinion paper aims to present and analyse the key facts regarding the impact of the Covid-19 crisis on how financial institutions might need to address the new challenges post the Covid-19 crisis and how it could interfere on ECB supervision agenda and SSM priorities.

COVID-19 CRISIS

Briefing Note

Payment deferral and state guarantee in the context of the covid-19 crisis

The lockdown put in place to contain the spread of COVID-19 has triggered a sudden halt in the economy, with the impact felt intensely more or less across all sectors. So far, the policy response from governments, central banks and bank supervisors has been swift and far reaching, in order to contain the economic fallout and any risks to financial stability.

CSDR

Briefing Note

Overview of the Settlement Internaliser in the CSDR

The CSDR (Central Securities Depository Regulation) was put into effect in September 2014, with the objective of harmonising settlement process and systems across Europe, after the financial crisis. This briefing note focuses on the role of the Settlement Internaliser and its reporting requirements under this regulation.  

SFTR

Briefing Note

Securities Financing Transactions Regulation

The European Commission introduced the Securities Financing Transactions Regulation to increase the transparency of securities financing markets. Avantage Reply takes a close look at the implications, challenges and opportunities posed by the regulation. 

EBA

Briefing Note

EBA ITS on supervisory reporting

On October 16th 2019, the EBA published the consultative paper on revised Implementing Technical Standards (ITS) on supervisory reporting, which aim to keep the reporting requirements in line with changes in the regulatory framework.

DPM 2.9

Briefing Note

Reporting Framework 2.9

Article 99 of the CRR (Regulation (EU) No 575/2013) requires the European Banking Authority (EBA) to develop and maintain so-called Implementing Technical Standards (ITS) on supervisory reporting. They shall notably cover own funds, large exposures, leverage ratio, liquidity coverage ratio, additional monitoring metrics (AMM), stable funding, asset encumbrance (regrouped under COREP), financial information (FINREP), supervisory benchmarking (SBP) and resolution planning (Resolution).

Inter-Bank Offered Rates

Briefing Note

Preparing for the end of IBOR

Inter-Bank Offered Rates (IBOR, of which LIBOR is one example) are being forced out due to regulatory pressure following a series of scandals. This transition will have significant ramifications as these rates are used as references in many wholesale transactions and some retail transactions. Following industry and regulatory consultations, new Risk-Free Rates (RFR) are replacing IBORs. In this publication, Avantage Reply will explore the impacts of this transition on banks.

SREP 2019

Briefing Note

SREP 2019: what can be learned regarding SREP 2018 outcomes?

This briefing note aims to present and analyse the key facts and main outcomes of the Supervisory Review and Evaluation Process 2018, as applicable in 2019.

Liquidity Stress Test

Briefing Note

Liquidity Stress Tests: are you ready?

This briefing note aims to present first the forthcoming ECB's supervisory stress tests, highlighting areas that banks should anticipate by the summer of 2019, especially concerning operational issues. Secondly, this paper shares a number of market practices surrounding liquidity stress test frameworks for internal management and strategic steering purposes.

SREP

Briefing Note

EBA’S Revised SREP Guidelines

The comprehensive common EU SREP framework was established in 2014 and has been applied in practice since 2016. Following global regulatory developments, as well as the EBA's supervisory convergence assessments, specific changes were needed to reinforce the SREP framework.

Stress tests

Briefing Note

BCBS/EBA: Latest Publications on Supervisory and Institution Stress Tests

This briefing note focuses on the key sets of guidelines on institutions' stress testing, highlighting areas that banks should carefully evaluate to address the requirements in a timely fashion considering compliance and associated operational issues.

IRRBB

Briefing Note

EBA: latest developments regarding technical aspects of IRRBB

On the 31 October 2017, the EBA published a consultation paper. The objective is to consult on the revisions in the first quarter of 2018, targeting practical implementation by the end of 2018. This publication focuses on the implications of these latest developments for banks, highlighting areas that should be evaluated when addressing the requirements, considering all compliance operational issues.

Custody banks

Briefing Note

FCA plans review of custody banks’operational resilience

On 18 April, the FCA released their 2017/18 Business Plan describing their planned work for the coming year. Amongst their priorities relating to retail customers, technology and AML was an announcement from the FCA of planned supervisory interventions in the custodian banking sector.

UK stress test

Briefing Note

The Bank of England 2017 stress test: A catalyst for more efficient stress testing

On 27 March the BoE published the scenarios for their fourth annual stress test. Clearly this is not just a routine annual process; the BES and IFRS 9 make this test more operationally challenging. This paper takes a brief look at ways banks can improve the efficiency of their stress tests in the future.

Recovery and Resolution

Briefing Note

Recovery and Resolution Frameworks for Insurers

The EIOPA issued on 2 December 2016 a discussion paper on “potential harmonisation of recovery and resolution frameworks for insurers”. The aim of this document is to focus on key aspects of the discussion paper on which EIOPA is seeking feedback from insurers.

Bank's business models

Briefing Note

Banks’ business models: Enhanced monitoring by the ECB

This Briefing Note focuses on the business model analysis, highlighting areas that banks should carefully evaluate to address the requirements in a timely fashion, considering all compliance and associated operational issues.