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Consolidation in the banking sector

Consolidation in the banking sector

​​ESBG responds to the European Central Bank consultation​

>> See full ESBG response

BRUSSELS, 7 October 2020 – ​ESBG replied on 1 October to the European Central Bank public consultation on its supervisory approach to consolidation in the banking sector. 

In its response, ESBG noted that it shares the main objectives of improving the applicability of the current regulatory framework by increasing its transparency, offering predictability as well as the adoption of a flexible enough approach to evaluate consolidation transactions on a case-by-case basis. 

The association of 885 savings and retail banks in 21 European countries added that a timely execution of consolidation projects is  a key success factor for a transaction and it reduces operational risk. ESBG adds it expects that “close supervision by the ECB in the implementation phase” does not result in unreasonably excessive, additional work-load and/or unplanned regulatory reviews.

ESBG does not expect the implementation of any additional regulatory requirements or limitations beyond the requirement of appropriate accounting treatment of badwill, according to the applicable accounting principles. It is also important to have more clarity and guidance on the expectations for the approach of consolidating the internal models, ESBG notes, to avoid full-fledged roll-out plans that may take years to implement for entities that may already have years of model use experience. The aim shall be, especially when the acquirer has experience with model use, to minimise the need for new applications for approval of the models at the time of or for a period after the business combination.

European Supervisory Authorities (EBA-ESMA)