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ESBG responds to EBA standards on encumbered assets

ESBG responds to EBA standards on encumbered assets

​Says standard could lead to erroneous interpretation with unintended consequences for reporting entities, namely banks.​

>> Download: full consultation response (.pdf)

>> See: ESBG position on capital requirements 

​​BRUSSELS, 26 July 2016 – Information provided by namely by banks under proposed EU disclosure requirements of encumbered and unencumbered assets could lead to erroneous interpretation with unintended consequences for them, according a response by ESBG to the EBA consultation on Draft Regulatory Technical Standards on the issue. Submitted this week, the savings and retail banking association noted in its response that information disclosed is highly sensitive and could possibly even lead to restricted access to funding for the reporting entity.

Representing 1000 savings and retail banks in 20 European countries, ESBG also pointed out that inherent market-sensitive information relating to these types of assets, a topic  of interest to its members for some time, would require further interpretation guidance should it be publicly disclosed.

The EBA consultation launched on 25 April consist of six questions, all of which addressed by ESBG on behalf of member concerns. It especially highlighted concerns around frequency of reporting, median values and measurement of asset quality.  

About Article 443 of the Capital Requirements Regulation

Article 443 of Regulation (EU) 575/2013 of the CRR mandates the EBA to develop draft regulatory technical standards (RTS) on unencumbered assets taking into account the European Systemic Risk Board (ESRB) Recommendation (ESRB/2012/2 of 20 December 2012) on the funding of credit institutions. Consequently, the EBA has drawn up these RTS which, in addition to fulfilling the requirement of the CRR, will fulfil Recommendation D on market transparency on asset encumbrance in the ESRB Recommendations. As recommended by the ESRB the EBA has developed this set of draft RTS, building on the gradual approach, according to which disclosures are to be enhanced after the first year following adoption of the EBA Guidelines.

Following the end of this consultative period, the draft RTS will be finalised and submitted to the European Commission for it to decide whether to endorse EBA's draft technical standards.​

Capital Requirements Directive and Regulation; Regulation; Supervision; European Supervisory Authorities (EBA-ESMA); European Institutions