EBA欧洲银行-EBA-RTS-2016-04-28Final-draft-RTS-on-criteria-for-a-preferential-treatment-in-cross-border-intragroup-financial-support-under-LCR29_36页_829kb

EBA Final Regulatory Technical Standards Summary

Core Content

The EBA Final Regulatory Technical Standards (RTS) aim to further specify the additional objective criteria for the application of preferential liquidity outflow or inflow rates for cross-border undrawn credit or liquidity facilities within a group or institutional protection scheme (IPS), as outlined in Articles 29(2) and 34(2) of the Commission Delegated Regulation (EU) No 2015/61 (LCR Delegated Act), under Articles 422(10) and 425(6) of the Capital Requirements Regulation (CRR).

The purpose of these standards is to ensure that preferential treatment is applied only in cases where safeguards are in place and where competent authorities can be confident that the liquidity support within the group or IPS will not negatively impact the liquidity soundness of the provider or receiver. These standards are also intended to alleviate compliance burdens for institutions and to promote internal liquidity synergies within banking groups.

Main Points

1. Low Liquidity Risk Profile

• The liquidity provider and receiver must demonstrate a low liquidity risk profile.
• This is determined by:
  • Compliance with the liquidity coverage ratio (LCR) and Pillar 2 requirements.
  • A supervisory assessment based on the latest review and evaluation process.
• If a provider or receiver fails to meet the required LCR or supervisory requirements, they must notify competent authorities immediately and describe the impact on the preferential treatment.

2. Legally Binding Agreements and Commitments

• The credit or liquidity line must be legally and practically available at any time, including during stress periods.
• It must be specifically dedicated to the preferential treatment and available on demand.
• A written and reasoned legal opinion, approved by the management body, is required to confirm the validity and enforceability of the agreement in relevant jurisdictions.
• The currency denomination, amount, cost, maturity, and terms of the line must be clearly specified.
• The line must have a minimum remaining maturity of six months, or if no maturity date is provided, a minimum notice period of six months for cancellation.

3. Consideration of Liquidity Risk Profile in Risk Management

• The liquidity provider must monitor and oversee the liquidity position of the receiver on a daily basis.
• The effects of the preferential treatment must be integrated into the contingency funding plans of both the provider and receiver.
• The provider must ensure that it can provide liquidity to the receiver without adverse impact on its own liquidity position.
• The contingency funding plan must not rely on the liquidity needed to support the receiver’s committed line.

4. Preferential Treatment Application

• Preferential treatment can be granted by competent authorities on a case-by-case basis.
• It is only applicable to cross-border transactions if the additional objective criteria are met.
• If a provider or receiver fails to meet the criteria, the preferential rates may be suspended to avoid procyclical or contagion effects.

5. Exemption from Inflow Cap

• Credit institutions can exempt from the 75% inflow cap for inflows from:
  • Parent or subsidiary institutions.
  • Institutions within the same IPS.
• This exemption is subject to prior approval from competent authorities.

6. Waiver of LCR Requirements

• Waivers can be granted by competent authorities for individual institutions under strict conditions.
• A liquidity sub-group is formed, and compliance is required at the sub-group level.
• This is intended to facilitate liquidity management across the banking group.

Key Information

• Scope: Applies to cross-border undrawn credit or liquidity facilities within a group or IPS.
• Conditions for Preferential Treatment:
  • Low liquidity risk profile.
  • Legally binding agreements and commitments.
  • Effective monitoring and integration into contingency funding plans.
• Safeguards:
  • Minimum remaining maturity of six months.
  • Legal opinions and regular updates.
  • Immediate notification in case of non-compliance.
• Impact Assessment:
  • The analysis is qualitative due to the lack of systematic data.
  • The preferential treatment is intended to support internal liquidity flows and enhance financial stability.
• Entry into Force:
  • The RTS will enter into force 20 days after publication in the Official Journal.
  • It is binding and directly applicable in all EU Member States.

Conclusion

These RTS aim to ensure the stability of the European banking sector by specifying clear and objective criteria for preferential liquidity treatment. They are designed to balance the benefits of internal liquidity support with the need for prudence and supervisory oversight. The implementation is expected to be cost-effective and not overly burdensome, while promoting transparency and risk management across the single market.