Bank Prudential Regulation & Regulatory Capital
US Office of the Comptroller of the Currency Releases Fiscal Year 2016 Bank Supervision Operating Plan
On September 25, 2015, the US Office of the Comptroller of the Currency released its bank supervision operating plan for fiscal year 2016. Generally, the operating plan identifies the OCC's bank supervision priorities and objectives for the year and guides the development of supervisory strategies for national banks and federal savings associations. According to the plan, supervisory strategies for fiscal year 2016 will focus on: (i) business model and strategy changes; (ii) compliance; (iii) credit risk and loan underwriting; (iv) cybersecurity and resiliency planning; and (v) interest rate risk.
The press release is available at: http://www.occ.gov/news-issuances/news-releases/2015/nr-occ-2015-130.html.
The operating plan is available at: http://www.occ.gov/news-issuances/news-releases/2015/nr-occ-2015-130a.pdf.
European Banking Authority Consults on Draft Guidelines on Application of Definition of Default under the Capital Requirements Regulation
On September 22, 2015, the European Banking Authority published a consultation paper on its draft guidelines specifying the application of the definition of default in relation to the Internal Ratings Based Approach and the Standardized Approach under the Capital Requirements Regulation. The draft guidelines aim to harmonize the definition of default across the EU framework so that EU banks apply regulatory requirements to their capital positions in a more consistent, comparable and uniform way. The guidelines provide clarification for the definition of default, also covering issues such as indications of unlikeliness to pay, the days past due criterion for default identification and the conditions for a return to non-default status. Comments are due by January 22, 2016.
The consultation is available at: http://www.eba.europa.eu/documents/10180/1198203/EBA-CP-2015-29.pdf.
European Banking Authority Opinion on Draft Technical Standards on Additional Liquidity Monitoring Metrics
On September 25, 2015, the EBA published an opinion on the European Commission's proposal to amend the final draft Implementing Technical Standards on additional liquidity monitoring metrics under the CRR. The metrics aim to provide regulators with a more comprehensive liquidity risk profile of a firm according to the nature, scale and complexity of its activities. The Commission had proposed for the maturity ladder templates and instructions to be removed, due to these being based on the provisional approach to reporting requirements under the CRR and so that the ITS are adapted to the new and more detailed definition of liquid assets which becomes applicable from October 1, 2015. The EBA's opinion states that the benefits of having the maturity ladder as initially proposed rather than not having a harmonized tool at all for the next two years (which is the estimated time required to update the ITS and have them adopted by the Commission and implemented by institutions) are greater. If the maturity ladder is kept in the final ITS, the EBA will proceed promptly with an updated ITS, bringing them into line with the new liquidity provisions. The EBA also supports the Commission's suggestion to amend the date of application of the ITS from July 1, 2015 to January 1, 2016. A revised draft of the ITS is included in the annex to the Opinion.
The Opinion is available at: http://www.eba.europa.eu/documents/10180/983359/EBA-Op-2015-29.pdf">29.pdf.
European Banking Authority Publishes Guidelines under Capital Requirements Directive
On September 28, 2015, the EBA published final translations of its Guidelines on common procedures and methodologies for the Supervisory Review and Evaluation Process under the Capital Requirements Directive. The Guidelines include: (i) an overview of the common SREP framework; (ii) details on how regulators are to apply the principle of proportionality in their supervisory engagements with different types of firms; (iii) overall risk management and governance arrangements; and (iv) regular monitoring of key financial and non-financial indicators for changes in financial conditions and risk profiles of firms. National regulators must notify the EBA by February 20, 2016 as to whether they comply or intend to comply with the Guidelines.
The Guidelines are available at: http://www.eba.europa.eu/documents/10180/935249/EBA-GL-2014-29.pdf/4b842c7e-3294-4947-94cd-ad7f94405d66.
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