ESBG stresses economic impact of data flows outside European Union
BRUSSELS, 22 December 2020 – ESBG, together with 17 other European associations recently signed a joint statement on the European Data Protection Board supplementary measures. ESBG points to the impact of data flows for Europe: Whether for consumers buying products or services through their bank accounts, medical research or suppliers collaborating to overcome a health crisis, paymasters remunerating employees, travellers booking a flight or a hotel.
ESBG considers that the current draft recommendations released by the European Data Protection Board (EDPB) will make Europe’s ability to operate within the global economy unreasonably impractical. The draft recommendations are overly prescriptive, mandate specific technical measures in all situations and focus on unworkable end-to-end encryption. The draft recommendations create legal uncertainty and hamper the free flow of data, causing a negative impact on digital trade and the benefits it offers Europe’s society.
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Centenary Bank in Uganda signs on to Scale2Save
Scale2Save Campaign
Micro savings, maximum impact.
Will launch ‘no-frills’ account in Uganda. - Two-pronged project will also tap into family & friends to boost take up, account use
WSBI and Centenary Bank signed recently a memorandum of understanding for a new Scale2Save project to help small-scale savings work in Uganda.
Signed during a ceremony on 18 October in Washington, D.C., the memorandum outlines projects to introduce and test in Uganda a ‘No-Frills’ basic mobile-phone-operated savings account specifically designed for the low-income people. Centenary looks to launch and test the offer via CenteMobile – the bank’s digital channel.
Centenary Bank Managing Director Fabian Kasi (pictured above, at left), who signed the memorandum, noted: “The mobile account will be scaled up to 187,500 customers by its Cente banking agent network, sales representatives and staff during the pilot phase”.
The no-frills account pilot aims in the medium- to long-term to establish a “gateway-to-banking” product for low-income Ugandans. People who start with the account, set for a pilot phase in Central and Western regions of the country, can graduate to a regular savings account. From there, they can eventually gain access to the full suite of banking products, including credit. The project is especially important for rural communities to flourish.
The second innovation will introduce financial incentives for existing customers to on-board new ones into the no-frills account. The project taps into and measures the influence and impact made by friends and family to boost uptake and active use of banks and their services within the retail and mass market. A new bank account will be instantly generated at branch and agent level. It then debits the introducer’s account and credits the newly introduced account holder with the equivalent amount.
Commenting on the initiative and support from WSBI under the Scale2Save programme, MoU signatory and WSBI Managing Director Chris De Noose added: “Centenary Bank is taking an innovative, multi-pronged approach to address the need for viable small-scale savings. They also look to test shared agency infrastructure with Finca Uganda, another Scale2Save partner.”
About Centenary Bank
Centenary Bank is Uganda’s leading commercial microfinance bank, serving more than 1.4 million consumers, employing over 2,700 staff and holding an asset base of UGX 2.706.3 Billion (US$733 million)as of 31 December 2017. It also has a growing network of 176 ATMs, 70 branches, and over 400 Cente Agents across the country. Centenary Bank started in 1985 with two main purposes: serve the rural poor and make a meaningful contribution to the socio-economic development of Uganda. In 1993, it transitioned to Centenary Rural Development Bank Limited and licensed as a full-service commercial bank. The bank aims to be Uganda’s best provider of financial services, especially microfinance. Centenary Bank began in 1983 as a credit trust of the Uganda National Lay Apostolate.
Scale2Save
ESBG statement on dividends
The following statement by ESBG reacts to the European Central Bank 15 December recommendation on bank dividends.BRUSSELS, 18 December 2020 - ESBG appreciates the broad and open public debate, which took place over the past months, on banks’ dividends distribution, and we were pleased to see that the ECB recommended a less restricting approach earlier this week. This underlines once again that European banks are solid. We also welcome the review clause, which indicates that the path towards “normalisation” can possibly be continued next year.
Moreover, we fully agree with the authorities’ intention to ensure that lending to households and corporates is maintained during these challenging times. Savings and retail banks in Europe have a provable track record of fulfilling this duty in an excellent way during the Covid-19 crisis.
Nevertheless, we would like to point out a few more aspects, which might have been overlooked in the public debate.
First, we would like to make reference to savings and retail banks’ “Foundations”. These are socially committed bodies which are nourished by banks’ dividends. Hence, at the end of the day, a too restrictive dividends policy may be to the detriment of those who usually benefit from the Foundations projects. The fight against poverty, the fight for better financial literacy, and the support of small and regional projects are examples of what is being channelled through the valuable work of ESBG members’ Foundations.
Furthermore, we would like to recall the large number of small shareholders of savings and retail banks that hold bank equity. A bank dividend can, to a certain extent, sustain these shareholders’ income and facilitate that money flows back in the local economy.
Last, but not least, even if savings banks’ business model is characterised by a very regional focus, financial services, financial markets and the flow of money are global. No savings and retail bank can avoid this global dimension. If European banks are becoming less attractive to investors than non-European peers, the cost of capital for EU banks will become higher.
ESBG members have been standing by their customers since day one of the crisis, for example by issuing a great number of additional loans and by swiftly agreeing with their customers on payment moratoria. It goes without saying that ESBG members will continue to do their utmost to reduce the negative effects of the crisis for their customers, who often are households and SMEs. However, savings and retail banks – as well as their Foundations and their beneficiaries – also depend on a well-balanced regulatory framework provided by the legislators and authorities, which might have counterproductive effects.
Note to editors:
The European Central Bank (ECB) recommended that banks exercise extreme prudence on dividends and share buy-backs. To this end, the ECB asked all banks to consider not distributing any cash dividends or conducting share buy-backs, or to limit such distributions, until 30 September 2021.
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ESBG statement: EU Commission NPL action plan
ESBG appreciates strongly the active approach contained within the Action Plan on Non-Performing Loans (NPLs) published today by the European Commission and the tools it contains to manage NPLs. We see a lot of good ideas within the plan that arrives when Europe’s economy and people struggle.
Helping Europeans stay resilient since the Covid-19 crisis began, ESBG members have supported their customers in a resolute way on many fronts. Amongst those, an added batch of new loans granted to businesses and households who found themselves short on liquidity. Nevertheless, the ongoing Covid-19 crisis takes a heavy toll on real-economy companies and private households. Some will lose their fight for financial survival, that’s unavoidable. As a consequence, it seems likely that bank balance sheets will take a hit. We are optimistic, however, that NPL levels of ESBG member banks will not rise to unsustainable levels in the savings and retail banking sector.
We do have our doubts, however, about parts of the plan. One questionable element, the proposed development of secondary markets for distressed assets, figures too prominently as an answer to cleanse financial institution balance sheets. Forced sales of loans gone sour – so-called “fire sales” – fall short as a solution. Suboptimal at best, these fire sales lead to prices plunging far below market level while ceding control over the final debtors to buyers whose only interest focuses on short-term profits, not long-term commercial relationships with borrowers. Going down this path could erode confidence between clients and ESBG member savings and retail banks, whose trust-driven business model has remained intact for families and firms for several generations.
Some 885 members banks provide €1 trillion in financing to businesses of all shapes and sizes. They work with people from start-up phase to jobs-creating, export-driven maturity. A prudent and long-term risk management approach, with customer proximity as a core pillar of savings’ banks business model, already avoids excessive build-up of NPLs.
Public and private sector must continue to work together on solutions to mitigate the negative effects of the Covid-19 crisis. We look forward to a further dialogue with EU institutions and would stand ready to share expertise in an advisory panel foreseen to be set up.
For more information, please contact:
– Dirk Smet on +32 473 423589 or at dirk.smet@wsbi-esbg.org; or
– James Pieper on +32 496 51 72 70 or at james.pieper@wsbi-esbg.org.
Note to editors: About ESBG – The European Savings and Retail Banking Group
ESBG represents the locally focused European banking sector, helping savings and retail banks in 20 European countries strengthen their unique approach that focuses on providing service to local communities and boosting SMEs. An advocate for a proportionate approach to banking rules, ESBG unites at EU level some 885 banks, which together employ 664,000 people driven to innovate at 47,900 outlets. ESBG members have total assets of €5.7 trillion, provide €1 trillion in corporate loans, including to SMEs, and serve 164 million Europeans seeking retail banking services. ESBG members commit to further unleash the promise of sustainable, responsible 21st century banking.
ESBG response: EBA public consultation on revision of guidelines on major incident reporting under PSD2
The European Savings and Retail Banking Group (ESBG) welcomes the opportunity to respond to this public consultation from the European Banking Authority on the revision of the Guidelines on major incident reporting under PSD2.
ESBG and its Members are highly supportive of the proposed revision. We especially welcome the fact that the amended Guidelines optimise the reporting templates and allow PSPs more time to report major incidents to National Competent Authorities. We also appreciate that the new reporting framework will avoid the reporting of minor incidents, thus shifting banks’ time and resources on the really major ones. At the same time, ESBG and its Members would appreciate further clarity on the interpretation of some criteria and definitions and recommend the various reporting frameworks be further aligned. ESBG and its Members stand ready to further engage with the EBA in the weeks and months to come.
The EBA invites comments on all proposals put forward in this paper and in particular on the specific questions summarised in 5.2. Comments are most helpful if they:
- respond to the question stated;
- indicate the specific point to which a comment relates;
- contain a clear rationale;
- provide evidence to support the views expressed/ rationale proposed; and
- describe any alternative regulatory choices the EBA should consider.
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ESBG statement: EU Commission NPL action plan
BRUSSELS, 14 December 2020 – ESBG submitted today its response to the European Banking Authority consultation paper on the draft revised guidelines on major incident reporting under PSD2.
ESBG and its members are highly supportive of the proposed revision. The association especially welcomes the fact that the amended guidelines will optimise the reporting templates and will allow payment service providers more time to report major incidents to National Competent Authorities. They also appreciate that the new reporting framework will avoid the reporting of minor incidents, thus shifting banks’ time and resources on the really major ones. At the same time, ESBG and its members called for further clarity on the interpretation of some criteria and definitions and recommend the various reporting frameworks be further aligned. They stand ready to further engage with the EBA in the weeks and months to come.
Irrevocable Payment Commitments
BRUSSELS, 11 December 2020 – ESBG recently called on EU authorities to leverage the flexibility inscribed in the current regulatory framework by increasing the share of irrevocable payment commitments (IPC) to 30% of SRF ex-ante contributions for 2021.
Outlined in a letter sent on 24 November to the Single Resolution Board (SRB) and to the European Commission, ESBG noted that while the IPC is set now at 15%, increasing the share of the commitments would provide some flexibility to banks and would allow them to further support the economy in the Covid-19 outbreak context.
ESBG also noted that it is also essential that IPC amounts remain non-deductible from CET1 to allow this measure to be fully effective and in line with level 1 texts.
IPC are defined as an obligation on the part of credit institutions to pay their contributions in the future through a contract signed between the financial arrangement and an institution that opts for the IPC. This is a perpetual and irrevocable obligation secured by low-risks asset as collateral, such as cash, which should be unencumbered and earmarked for exclusive use by the receiving authority.
IFRS Foundation: Consultation paper on sustainability reporting
WSBI-ESBG welcomes the opportunity to comment on the IFRS Foundation’s Consultation Paper on Sustainability Reporting.
The report answers the following questions:
- Question 1: Is there a need for a global set of internationally recognised sustainability reporting standards?
- Question 2: Is the development of a sustainability standards board (SSB) to operate under the governance structure of the IFRS Foundation an appropriate approach to achieving further consistency and global comparability in sustainability reporting?
- Question 3: Do you have any comment or suggested additions on the requirements for success as listed in paragraph 31 (including on the requirements for achieving a sufficient level of funding and achieving the appropriate level of technical expertise)?
- Question 4: Could the IFRS Foundation use its relationships with stakeholders to aid the adoption and consistent application of SSB standards globally? If so, under what conditions?
- Question 5: How could the IFRS Foundation best build upon and work with the existing initiatives in sustainability reporting to achieve further global consistency?
- Question 6: How could the IFRS Foundation best build upon and work with the existing jurisdictional initiatives to find a global solution for consistent sustainability reporting?
- Question 7: If the IFRS Foundation were to establish an SSB, should it initially develop climate-related financial disclosures before potentially broadening its remit into other areas of sustainability reporting?
- Question 8: Should an SSB have a focused definition of climate-related risks or consider broader environmental factors?
- Question 9: Do you agree with the proposed approach to materiality in paragraph 50 that could be taken by the SSB?
- Question 10: Should the sustainability information to be disclosed be auditable or subject to external assurance? If not, what different types of assurance would be acceptable for the information disclosed to be reliable and decision-useful?
- Question 11: Stakeholders are welcome to raise any other comment or relevant matters for our consideration.
About WSBI (World Savings and Retail Banking Institute)
WSBI represents the interests of 6,760 savings and retail banks around the world. WSBI focuses on international regulatory issues that affect the savings and retail banking industry. It supports the aims of the G20 in achieving sustainable, inclusive, and balanced growth, and job creation, whether in industrialised or less developed countries. Supporting a diversified range of financial services to meet customer need, WSBI favours an inclusive form of globalisation that is just and fair. It supports international efforts to advance financial access and financial usage for everyone. WSBI members have total assets of $16 trillion and serving some 1.7 billion customers in nearly 80 countries who seek retail banking services. WSBI members are committed to further unleash the promise of sustainable, responsible 21st century banking.
World Savings and Retail Banking Institute – aisbl
Rue Marie-Thérèse, 11
B-1000 Brussels
Tel: +32 2 211 11 11
Fax : +32 2 211 11 99
Info@wsbi-esbg.org ￭ www.wsbi-esbg.org
About ESBG (European Savings and Retail Banking Group)
ESBG represents the locally focused European banking sector, helping savings and retail banks in 21 European countries strengthen their unique approach that focuses on providing service to local communities and boosting SMEs. An advocate for a proportionate approach to banking rules, ESBG unites at EU level some 900 banks, which together employ more than 650,000 people driv-en to inno-vate at roughly 50,000 outlets. ESBG members have total assets of €5.3 trillion, pro-vide €1 trillion in corporate loans (including to SMEs), and serve 150 million Europeans seeking retail banking services. ESBG members are committed to further unleash the promise of sustaina-ble, responsible 21st centu-ry banking. Our transparency ID is 8765978796-80.
European Savings and Retail Banking Group – aisbl
Rue Marie-Thérèse, 11
B-1000 Brussels
Tel: +32 2 211 11 11
Fax : +32 2 211 11 99
Info@wsbi-esbg.org ￭ www. wsbi-esbg.org
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Covid-19 & microfinance sector
Scale2Save Campaign
Micro savings, maximum impact.
WSBI joins new global coalition to address pandemic effects on base-of-the-pyramid lives, livelihoods; institutions that serve them.
WSBI joins new global coalition to address pandemic effects on base-of-the-pyramid lives, livelihoods; institutions that serve them.
>> Read: Info on coalition in FinDev Gatway and
>> Learn more: Center for Financial Inclusion
BRUSSELS, 30 June 2020 – WSBI announced recently that it joined a new coalition with other industry actors during the wake of Covid-19 to support the bottom-of-the-pyramid people and the institutions that serve them.
Designed to raise the profile of microfinance organisations as critical players in the response to the unfolding crisis, the coalition led by FINCA Impact Finance began under the umbrella of the Partnership for Responsible Financial Inclusion (PRFI), housed at the Center for Financial Inclusion. Quickly extended far beyond PRFI membership. Members of the coalition include Scale2Save partner microfinance institutions Advans, BRAC and FINCA at group level. The trio join organisations such as AccessHolding, Accion, VisionFund International and Women’s World Banking in the coalition.
WSBI’s ScaleSave Programme Director Weselina Angelow commented: “Joining the coalition helps raise our voice jointly with other industry stakeholders. By supporting coalition aims outlined in the calls for action to support the microfinance industry, the group can help further progress policy debate around the sector with policymakers, investors and interested organisations like funders. The coalition gives a boost to more-tailored support to Scale 2Save MFI partners as well as WSBI MFI members.”
Coalition lines up with WSBI, Scale2Save scope, reach, aims
Collectively, these coalition partners serve more than 80 million active customers, 69 percent of whom women. Like other partners, WSBI microfinance members deliver financial services and strengthen their infrastructure through digital innovation to broaden financial inclusion, especially for the poor. WSBI members operate in some 80 countries, including in hard-to-reach rural and low-population areas.
WSBI, Scale2Save and MFIs : Joined up to help people at bottom of pyramid
WSBI places much emphasis on building capabilities and strengthening institutions that are best placed to serve the underserved and unbanked. It’s Scale2Save programme – a partnership between WSBI and Mastercard Foundation – looks to help establish the viability of small-scale savings, building resilience among people and communities, and focusing on people and their financial and life-skills journey. Like other coalition partners, WSBI’s Scale2Save programme places emphasis on helping especially vulnerable women, young people and farmers to make best use of digital innovations. Those advances help people gain safe and secure access to loans, government relief, more affordable money transfers but also better savings and in some instances micro-insurance products– a gateway to a broader set of financial services for poorer segments of the population.
Innovation indispensable to provide last-mile financial services
As millions of livelihoods hit by Covid-19 struggle, they seek critical access to credit, savings and other financial tools – increasingly through digital means, oftentimes serving those without formal employment prospects. Financial services provided by MFIs help people to operate small businesses frequently more resilient than the formal sector in the face of severe economic shocks like coronavirus, and which will be even more needed in a post-pandemic world where the economic hit slashes employment levels. Microfinance provides plays a critical role in not only mitigating the economic impact of the crisis, but also to accelerate recovery from it.
She concluded: “WSBI joins the coalition to focus on what is needed to support and protect those who use MFIs both now and tomorrow. By joining the coalition WSBI and its members join with high-impact coalition partners to make our voice heard. The coalition has therefore invited policymakers, donors and investors, who have received respective calls to action, which state a case for why each should support MFIs and their clients during the Covid-19 pandemic.”
>> Learn more about the coalition at FinDev Gatway and Center for Financial Inclusion website.
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IASB Discussion Paper 2020 2021 Business Combinations—disclosures, goodwill and impairment
WSBI-ESBG support IASB preliminary views to develop proposals to remove restriction that prohibits firms from including some cash flows in estimating value in use.
BRUSSELS, 7 December 2020 — WSBI-ESBG welcomes the opportunity to comment on the IASB discussion paper 2020/1 Business Combinations—Disclosures, Goodwill.
The two associations can understand the investor’s need to have information about the subsequent performance of an acquisition, however, we do not share how this issue is addressed in the discussion paper and we are concerned about some of the preliminary views being proposed. In a regulated sector, such as the banking sector, subject to a high level of scrutiny, there are to this day several information tools and channels at investor’s disposal that allow them to assess effectively the performance of banks after corporate operations of this kind.
We agree with IASB’s preliminary view that it should retain the requirement for companies to prepare pro forma information in the year of acquisition. However, the IASB may provide alternatives, which could work for preparers from a cost/benefit perspective when preparing current disclosures, by allowing the disclosure of the revenue and profit or loss of the acquiree for the period before the acquisition date, instead of this pro forma information. We support IASB’s preliminary views to develop proposals to remove the restriction that prohibits companies from including some cash flows in estimating value in use
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