State Aid rules for banks in difficulty

The European Savings and Retail Banking Group (ESBG) welcomes the initiative of the European Commission to launch a targeted consultation aiming at reviewing the State Aid rules for banks in difficulty.

The potential revision will assess the fitness of the current rules regarding burden-sharing, market discipline, financial stability, and the protection of taxpayers among other things. The modernized framework should ensure that the State Aid rules are applied proportionally, are adapted to the crisis management and deposit insurance (CMDI) legislation and are specifically targeted at different kinds of bank crises.

ESBG argues that all DGS measures available under the CMDI framework applied in accordance with the rules established by the DGSD and the BRRD/SRMR, regardless of national specificities in the design, the governance, and the functioning of DGSs, should be exempted from the application of the regular State Aid control rules. It should be made clear that when DGS funds are used for support measures, State Aid rules should not be applicable and no notification to the Commission be required. Exempting the application of the State Aid rules on actions under the CMDI framework will allow the effective and undisturbed use of measures foreseen under DGSD/BRRD/SRMR.
Furthermore, and until such improvements are effectively achieved, ESBG finds it important to avoid any increase in contributions to the national DGS and to the Single Resolution Fund (SRF).

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Banking in 2030 – How will the current global trends, especially AI, shape the post-Covid19 pandemic future of the European banking industry and its employees?

Banking in 2030 – How will the current global trends, especially AI, shape the post[1]Covid19 pandemic future of the European banking industry and its employees?

This is a call for a subcontractor to provide expertise as part of implementation of the Social Partners in the European Banking Sector’s project on “Banking in 2030”.

The deadline for submission of bids is Friday 22 July 2022. The European Social Partners for the banking sector (EBF-BCESA and Associated Partners EACB, ESBG, and UNI Europa Finance) have a long history of running successful, joint EU funded projects. The European Commission granted funding most recently for a 2016-2020 two-waves project on the ‘Impact of banking regulation on employment. Analyzing best practice at European, national and company level and developing joint approaches through “European Social Dialogue”, which was successfully completed.

This new project builds on the structure and findings of the previous ones, adding however a new dimension represented by digitalization and Artificial Intelligence in the aftermath of the Covid-19 pandemic. The Project this project has the following objectives: (1) to perform a qualitative analysis on how the development of Artificial Intelligence and digitalization, will affect the banking industry and its employees in the upcoming decade and what will be the effects of the COVID19 pandemic and banking regulation in this scenario (2) exchange experiences and examples on the impact of AI/digitalization and the Covid-19 pandemic on the banking sector in Europe and the effects on the employees; and (3) based on these findings, to develop and present to relevant stakeholders a joint European Social Partner approach on to provide recommendation on how to mitigate the impact of Artificial Intelligence and Covid-19 through legislation and how Social Partners can positively support these changes

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Strengthening the quality of corporate reporting and its enforcement in the EU

The EU corporate reporting framework has been developed with the purpose of ensuring that companies publish the right quantity and quality of relevant information with the ultimate purpose of allowing investors and other interested stakeholders to assess companies’ performance and governance and to take decisions based on that.

The consultation aims to evaluate the impact of the EU framework on the three pillars of high quality and reliable corporate reporting: corporate governance, statutory audit and supervision. This position paper is based on ESBG’s response to the consultation.
The European Commission adopted its proposal for a EUGBS in July 2021 and later launched a public consultation. In this context, ESBG has recently finalised a position paper that indicated some of the main concerns with the adopted proposal.

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Access to better technology for (Supervisory) Reporting

On 18 February 2022, the four European banking associations (EACB, EAPB, EBF and ESBG) co-hosted the “Access to better technology for (Supervisory) Reporting” workshop that brought together the entire European banking industry, the European Banking Authority and the international RegTech community to openly exchange views and learn from each other on how RegTech solutions could help banks reduce their reporting costs and what are the hurdles to clear along the way.

300 participants across Europe participated in this half-day, targeted workshop. The presentations delivered by the banking industry clearly revealed the many challenges and complexities the industry has been facing for about 15 years due to the flood of additional data reporting requirements to banks. Data has never been as important as it is now with regulatory reporting having shifted from a simple administrative task in the past to a strategic objective high in the agenda of banks and a steering tool, with supervisors placing increasing focus on data quality. The current situation is the result of a layering of successive regulations, by different authorities at national and EU level, with the added complexities of different definitions and shorter delivery times demanding substantial investment by banks in systems, processes, and specialized staff. Banks have been mastering these challenges very well, generally speaking, but there is always room to become even more efficient.

While there are existing cases where banks are already benefitting from the use of technology either from in-house solutions or by creating a shared utility as result of a joint venture or other forms of pooling of resources by a number of banking groups in a country, the discussion revealed there is still ample room to explore and lot of work ahead to benefit from technology at a large scale.

A dedicated panel composed by RegTechs based across Europe confirmed that technology is available or is being developed to support banks with a wide range of services offering from end-to-end to targeted solutions. RegTechs also confirmed complexity is the most challenging aspect in the current reporting environment identifying standardization, infrastructure, and automation as tools to decrease the complexity.

The different ways regulatory reporting is done in Europe also adds complexity. Creating a more functional and interconnected ecosystem is key to start moving towards a much-needed standardization where RegTechs can play a key role. Replying to questions raised by the banking industry, RegTechs stressed that technology should be seen as innovation that could help banks reach beyond the 15-24% cost reduction as estimated by an EBA study last year, rather than a black box that brings its own complexity. RegTechs are also trying to remove barriers by intensively promoting their services for which forums like the workshop organized by the trade banking associations was an ideal setting to bridge the gaps between RegTech and the banking industry.

With a forward-looking perspective, the EBA provided an overview of how the different recently launched initiatives such as the Integrated Reporting System and the Commission’s supervisory data strategy aim to shape the future of supervisory reporting. The challenge is big, but the benefits are worth. The banking industry, RegTech community and supervisory authority agreed events like the workshop are key to foster collaboration and they will stay in close contact.

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Proportional and clear guidelines would ensure citizens' data protection and foster innovation

The ESBG, together with eight other associations representing the EU payment sector, has written to the European Data Protection Board, the European Commission and the European Banking Authority about the EDPB Guidelines 06/2020 on the interplay between the reviewed Payment Services Directive (PSD2) and the General Data Protection Regulator(GDPR).

The letter highlights that while the payments sector remains fully committed to ensuring the protection of EU citizen’s data- including within the framework of PSD2 – there are concerns that the enforcement of the Guidelines will lead to an outcome that is not in line with PSD2 objectives. In the end, this would hinder innovation and competition in payments.

Although the final Guidelines help in clarifying certain aspects of the interplay, our letter emphasises and reiterates common concerns:

  • Provisions on data minimization create uncertainties and are potentially in conflict with PSD2;
  • There is lack of coherence with the Regulatory Technical Standards on Strong Customer Authentication and Common and Secure Communication (RTS on SCA & CSC);
  • Financial transaction data should not be considered as special category of personal data (SCPD). As such, if financial transaction data is not processed in order to infer SCPD, Article 9(1) GDPR should not apply.
  • There are resulting concerns that national Data Protection Authorities could start taking a differentiated approach to the interpretation of the provisions, resulting in fragmentation across the EU and adding to a growing trend when it comes to GDPR implementation.

Overall, the EU payments industry welcomes further discussion between all relevant institutions and stakeholders in the GDPR-PSD2 ecosystem to address these challenges and to provide legal certainty for all actors to enable them to meet their obligations and continue to provide top-tier services for their customers.

READ THE FULL JOINT LETTER

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ESBG welcomes the financial competence framework by the European Commission and OECD

ESBG Managing Director, Peter Simon, shares the vast experience of European Savings and Retail Banks on financial education during panel discussion.

BRUSSELS, 25 January 2022 – The European Savings and Retail Banking Group (ESBG) applauds and welcomes the ‘Financial competence framework for adults in the European Union’ launched today by the European Commission (EC) and the OECD’s International Network on Financial Education (INFE).

“This framework provides much needed guidance to ensure citizens are prepared to make sound financial decisions that help them prosper and build resilience across all Member States”, said ESBG Managing Director, Peter Simon, who participated in a panel discussion to launch the initiative.

“Building financial education and literacy is part of European Savings and Retail Bank’s DNA and history, who have been carrying out for decades a number of different financial education programmes with the greatest dedication. Together with our members, ESBG can only celebrate an initiative from the public sector that aims at the same goal, which is to empower citizens to make the right choices for their financial well-being”, he added. “We all need to work together”.

In particular, ESBG applauds the fact that this framework, which includes 563 personal finance competences, focuses not only on building knowledge but also skills across all age groups.

The framework builds on the OECD’s existing one, updating it to the EU context and enriching it with more detailed digital and sustainable finance competences. It is made available for voluntary uptake in the EU by public authorities, private bodies and the civil society.

It was published on 11 January and launched today on a virtual event by European Commissioner Mairead McGuinness, and OECD Secretary General, Mathias Cormann. The announcement was followed by a panel discussion with industry experts.

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ESBG elects Dominique Goursolle-Nouhaud as new president

The first woman president of the European Savings and Retail Banking Group (ESBG) is Dominique Goursolle-Nouhaud, president of the National Federation of French Savings Banks. She was elected today by the ESBG General Assembly for a period ending in 2024.

Dominique Goursolle-Nouhaud was elected today as president of the European Savings and Retail Banking Group (ESBG) for a three-year term. She is the first woman to occupy the position. She succeeds Helmut Schleweis, president of the German Savings Banks Association.

Together with ESBG members, Dominique Goursolle-Nouhaud will represent the specific model of savings banks, cooperative and retail banks at the European level. She is committed to showcase the social and economic contributions of the ESBG members to their communities.

She is committed to ensure that the specificities of the business model of the ESBG members are considered by EU policymakers. With ESBG, she will stand for a proportional application of regulation and supervision.

“We must defend the added value of our model”, said Dominique Goursolle-Nouhaud as she was elected. “Our strength today is to remain united to rise to the challenges of tomorrow. Let’s be stronger together”.

The members of the ESBG president committee are:

Isidro Fainé, president of CECA (Confederación Española de Cajas de Ahorros);
Helmut Schleweis, president of the German Savings Banks Association (Deutscher Sparkassen- und Giroverband);
Jens Henriksson, president and CEO of Swedbank;
Gabriele Semmelrock-Werzer, president of the Austrian Savings Banks Association (Österreichischer Sparkassenverband); and
Gerhard Brandstätter, Chairman of Cassa di Risparmio di Bolzano SpA.

About the National Federation of French Savings Banks

The National Federation of French Savings Banks (Fédération nationale des Caisses d’Epargne) is the body that represents 15 savings banks and regional cooperative banks, as well as their 4.5 million members and 2,600 elected representatives. Its main missions are to coordinate and strengthen the relation between the savings banks and their members/customers; to represent their common interests, in particular towards the public authorities; to support and train the elected representatives of the members; to define, coordinate and promote the social and environmental responsibility actions of the savings banks.

About ESBG

The European Savings and Retail Banking Group (ESBG) has 23 members in 18 countries. As some of its members are national organisations, ESBG represents the interests of over 800 banks working responsibly and closely with their communities and SMEs. Together, ESBG members manage assets worth €5,700 billion, serve 162 million Europeans and employ nearly 660,000 people.

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Joint declaration on remote work and new technologies

On 7 December 2021, the European Banking Social Partners signed a Joint Declaration on Remote Work and New Technologies. The spread of the Covid-19 pandemic and the constantly increasing use of digitalised systems and processes led the Social Partners to reassess and appropriately update our approach to remote work in the European Banking sector.

In adaptable pattern of remote work, which allows for both higher productivity and an improved work-life balance, is a key aspect of the current and future ways of working. Therefore, UNI Europa Finance together with the EBF’s Banking Committee for European Social Affairs (EBF-BCESA), the European Savings and Retail Banking Group (ESBG) and the European Association of Co-operative Banks (EACB), worked together to ensure that employees’ and employers’ interests are safeguarded in these continuously changing working environments.

UNI Europa Finance President Michael Budolfsen said: “With remote work increasing at a rapid pace during Covid and beyond, it is opportune for the European Social Partners to come together to ensure this new way of working will stimulate a good work-life balance and not have a negative impact on the sector and its workers”.

UNI Europa Finance Director Maureen Hick added: “UNI Europa Finance welcomes the signing of this Joint Declaration and the commitment made today that remote work will not lead to any significant changes to bank employees’ rights and conditions and should be a topic of collective bargaining at all levels”.

Jens Thau, Chairman of EBF-BCESA, pointed out: “Banks and its employees have a strong track record of embracing new developments and putting them to work for their clients. The new Joint Declaration underscores the social partners’ commitment to responsibly shape this process of transformation.”

Michael Kammas, Vice-Chairman of EBF-BCESA highlighted: “The expertise of the Social Partners is pivotal when it comes to address new ways of working. This new Joint Declaration not only comes in the most appropriate time due to the pandemic and the continuous technological advancement, but it also shows the Social Partners’ ability to work together and agree on common approach encompassing all the significant aspects of Remote Work to ensure banks’ competitiveness and adaptability to the digitalized world of work.”

Peter Simon, Managing Director said for ESBG: “The Social Partners continuously strive for stable working conditions in accordance with the greater working situation. The Covid-19 crisis has escalated the need to establish good teleworking practices and adapt many roles to remote work. This Joint Declaration strengthens our commitment to employees to provide a secure environment”.

Nina Schindler, CEO of EACB explained: “The Social Partners’ agreement on the Joint Declaration on Remote Work is an effective and timely response to changes in working conditions. By signing this Joint Declaration, we demonstrate as the EACB our intent to safeguard the interests of European co-operative banks’ employees.”

The Social Partners have always proactively engaged with the effects of digitalisation. This new Joint Declaration builds on our previous commitments on Telework (2017) and on the Impact of Digitalisation on Employment (2018) by focusing on remote work as a specific type of adaptation to the way of working in the digitalised era. Understanding, shaping and keeping up with technological developments are very much at the heart of the European Social Partners’ approach in order to contribute to a strong and resilient banking industry.

To this end, the Social Partners have agreed to a common understanding regarding key aspects of remote work. These include collective trade union rights, health and safety, work-life balance, working hours and the right to disconnect, digital rights, resource and equipment costs, and access to training and career development.

This Joint Declaration on Remote Work and New Technologies is another significant achievement for the European Banking Social Partners, showing our continued commitment to engage together in current issues of common interest and adding our unique knowledge and contribution to the general debate on digitalisation.

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Isidro Fainé re-elected as WSBI president

Isidro Fainé, president of “la Caixa" Banking Foundation, was re-elected for another three years as president of World Savings and Retail Banking Institute (WSBI) at the organisation's 2021 General Assembly, held in Paris. The Institute's Managing Director will be Peter Simon of Germany.

WSBI members devote 1.8 billion dollars annually to the fight against poverty and social inequality.

The priorities for the coming years are: financial inclusion, promoting sustainable finance, innovation and embracing digitisation to forge ever-closer relations with customers, and strengthening solvency within the framework of Basel IV.

Besides Isidro Fainé and Peter Simon, the WSBI President’s Committee is formed by Dominique Goursolle-Nouhaud, president of the Fédération Nationale des Caisses d’Epargne (France); Rebeca Romero Rainey, president & CEO of the Independent Community Bankers of America (USA); Macario Armando Rosales Rosa, president of Fedecrédito (El Salvador); Helmut Schleweis, president of the German Savings Banks Association (Germany); Isara Wongrung, executive vice-president of the Government Savings Bank (Thailand); and Redouane Najmeddine, chairman of the Management Board of the Banque Al Barid (Morocco).

The members of the Assembly of this Institute, which represents the interests of 6,500 savings banks and retail banks in more than 60 countries, unanimously re-elected Isidro Fainé as WSBI president for the next three years. Peter Simon of Germany will be managing director over the same period.

The priority lines of action established for the coming years include financial inclusion, promoting sustainable finance (reflecting the fact that WSBI member institutions are characterised by their social commitment to the communities in which they operate), exchanges of good practice in the implementation of the new Basel IV solvency framework, and innovation, seeking to make digitalisation a tool to bring members closer to customers.

In his speech, Isidro Fainé noted that, “over the coming years, we will have to address major challenges: economic recovery, increasing inequality, demographic changes that will put pressure on natural resources, climate change, sustainability… The urge to help the most vulnerable and strengthen the community forms part of our members’ DNA: members’ social contributions stand at some 1.8 billion dollars per year, aimed at fighting poverty and social exclusion”.

During Isidro Fainé’s first mandate as president (2018-2021), the organisation focused on the following issues:

1) Promoting financial inclusion:

The WSBI has exceeded the targets set by the World Bank in its commitment to Universal Financial Access (UFA2020), increasing the number of banked people by 329 million between 2014 and 2020. Moreover, the organisation’s cooperation with the Mastercard Foundation was strengthened, leading to the launch of such initiatives as Scale2Save, focused on promoting savings in Africa. Collaboration also began with the Profuturo digital literacy project to promote financial education in developing countries.

2) Increasing dialogue with international organisations:

In response to the crisis caused by the pandemic, the WSBI has focused on promoting economic, fiscal and social measures before regulators, aimed at establishing a flexible framework that enables both a successful recovery from the crisis and that the new demands that arise as a result can be satisfied.

3) Encouraging cooperation among members:

The World Savings and Retail Banking Institute is formed by four regional groups (Europe, Asia-Pacific, Africa, and North America/Latin America/Caribbean). The coronavirus crisis has resulted in increased exchanges of good practice in responding to the financial needs of all types of groups, institutions, large enterprises, SMEs and families.

The World Congress also renewed the mandates of the other statutory bodies, including the Coordination Committee. Antonio Romero, Corporate Director of Association Services and Resources at CECA, was elected as chair of this committee, which coordinates the associated activities of the WSBI and the European Savings and Retail Banking Group (ESBG). Similarly, Joan Rosàs, Director of International Institutional Relations at CaixaBank, was appointed as the representative of the WSBI Board for International Relations. This representation strengthens the participation of the Spanish banking sector in European and international working groups.

Founded in 1924, the WSBI represents the interests of 6,500 savings and retail banks around the world. WSBI members have total assets of 15 trillion dollars, employing 2.2 million workers and serving some 1,400 million customers in 63 countries, with a network of 221.577 offices providing banking services all types of groups, institutions, large enterprises, SMEs and families.

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For transparent and efficient NPLs secondary markets

The additional disclosure requirements will not necessarily increase the efficiency of secondary markets for Non-Performing Loans (NPLs). The proposed solutions, such as the mandatory NPLs templates and the establishment of an EU Data Hub, bring additional complexity, costs and efforts to all market participants.

BRUSSELS, 9 September 2021 – The European Savings and Retail Banking Group (ESBG) replied yesterday to the European Commission’s targeted consultation on improving transparency and efficiency in secondary markets for Non-Performing Loans (NPLs).

With this consultation, the Commission wants to be informed on the remaining obstacles to the proper functioning of secondary markets for NPLs as well as actions that it could take to foster these markets by improving the quantity, quality and comparability of NPL data. The consultation will also enable the Commission to decide on whether EU coordinated action and/or policy measures would be taken. This in order to limit market failures in terms of information asymmetries, to increase market liquidity, to lower bid/ask spreads and hence to enable more efficient NPL markets.

From ESBG’s perspective, the statement that an increase of market transparency would have a positive impact on the efficiency of NPL secondary markets is not necessarily true. The proposed data structure of the revised NPL templates is in fact too wide, including a lot of non-essential data. This would make it more time consuming for investors to conduct operations on the NPLs market.

For those reasons, ESBG does not support the obligation to provide data on NPLs, especially not for low NPL banks (with an NPL ratio lower than 5%) who have no or little need to sell NPLs. It would make neither economic sense (the costs will surpass the benefits), nor would it materially support the build-up of an NPL trading market (as low NPL banks would not contribute to it). Furthermore, it would be against any proportionality consideration with regards to NPL size.

About the proposal for the establishment of an EU Data Hub for NPLs, ESBG would like to highlight that the information disclosure via Pillar 3 has been reinforced recently with heightened requirements for high-level NPL entities. These entities already provide all the relevant information they have, to get the best possible price. EBA NPL templates will further increase standardisation of NPL data.

ESBG believes that the risks of leaks of information largely outweighs the potential benefits of increased transparency. Even if data is anonymised, names of distressed companies could be identified, which could have very serious consequences, notably for firms that are still viable but whose debt one bank wants to sell, while other banks may not have recognised it as a non-performing counterpart.

Furthermore, there are many intangible parameters that have an impact on the price and purchase/sales volumes that cannot be collected in a Data Hub. Therefore, a partial analysis of the information provided could lead to infer wrong and undesirable conclusions.

In this context, the obligation to provide data on NPLs would not consider the role of all involved market participants and thus may have a negative impact for some of them – like the templates provide huge administrative burdens on the seller side but do not provide any incentive for buyers.

What must be pointed out is that the lack of a single NPL market is evident, amongst other factors, due to the differences in national insolvency laws and in jurisdictional systems. NPL markets work very differently across EU countries and the creation of a pan-EU Data Hub would not help NPL markets function any better.

ESBG members have a high level of operational readiness to deal with the increase in NPLs, when (and if) the need emerges. Accordingly, ESBG firmly believes that banks – or at least low level NPL banks – should rather be given the discretion to decide on the use of the NPL data templates even in their revised format in case of a sale. As sellers of NPLs, it is in the interest of banks to disclose relevant information in line with the characteristics of the product. Establishing a data hub with standardized data for all market participants could even reduce the liquidity and depth of the NPL secondary markets.

In conclusion, while understanding the rationality of aiming at increasing market transparency, ESBG believes that a solution should be implemented without bringing any additional complexity, investments and effort to all involved, using existing regulatory and legal framework and IT infrastructure.

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