EBA欧洲银行-08_European-Banking-Federation_15页_326kb

EBF Response to CEBS Consultation on Revised Large Exposures Regime

Core Content

The European Banking Federation (EBF) has provided a detailed response to the Committee of European Banking Supervisors (CEBS) consultation on draft implementation guidelines for the revised large exposures regime. The EBF is concerned that the current proposals may not achieve the goal of harmonised and convergent supervisory implementation across the EU, and instead could create unnecessary complexity and burden for banks.

The EBF supports CEBS' objective to align large exposures reporting with COREP, but believes the proposed guidelines need further clarification and simplification to ensure they are practical and effective. The EBF also highlights the need for a clear distinction between idiosyncratic risk and sectoral/geographic risk, which is essential for accurate risk assessment and management.

Main Views

1. Clarity and Simplicity of Guidelines

• The EBF is concerned that the current guidelines may be too detailed and not provide sufficient clarity, leading to potential misinterpretation.
• They argue that supervisors should focus on the big picture rather than an excessive amount of detail, as this could hinder effective risk management and decision-making.

2. Definition of Control and Connected Clients

• The EBF supports the concept of control based on majority ownership but finds the current list of cases where control may exist to be arbitrary.
• They suggest that the concept of control should be simplified and based solely on ownership of a majority of voting rights.
• The EBF also raises concerns about the exemption from grouping clients in relation to control, as it may not be clear how this aligns with existing practices and the revised CRD.

3. Economic Interconnectedness and Single Risk

• The EBF believes that the determination of economic interconnectedness is too vague and difficult to implement in practice.
• They stress the importance of distinguishing between idiosyncratic risk and sectoral/geographic risk, which are already addressed by other regulatory frameworks like Pillar II.
• The EBF is also concerned that the current interpretation of economic interconnectedness may lead to an overextension of the large exposures regime into the retail sector, which is not appropriate due to its nature and the lack of precision required.

4. Connection through Common Main Source of Funding

• The EBF acknowledges that securitizations can involve common funding sources but argues that the current guidelines may not be practical for standard lending activities.
• They suggest that the definition of "common main source of funding" should be limited to specific cases where legal restrictions exist, such as SPV/conduit structures.
• The EBF also calls for a clearer distinction between sectoral and idiosyncratic risk in the context of this definition.

5. Threshold for Large Exposures

• The EBF supports setting a threshold for large exposures but prefers a higher threshold (e.g., 5%) than the proposed 1%.
• A 1% threshold is seen as impractical and may blur the purpose of identifying concentration risks.
• The threshold should be applied at the consolidated level or at least to entities with consolidated credit processes.

6. Control and Management Procedures

• The EBF believes that clear procedures for identifying connected clients are essential for effective implementation.
• They highlight the lack of clear definitions for "connected clients" and "single risk" and stress the need for unequivocal criteria.
• The EBF also raises concerns about the proposed supervisory override and suggests that regulators should focus on ensuring banks have appropriate internal procedures rather than micromanaging individual cases.

Key Recommendations

• Clarify definitions of "control", "economic interconnectedness", and "common source of funding" to ensure consistency and clarity.
• Simplify data requirements to avoid unnecessary administrative burden and ensure that the focus remains on meaningful risk analysis.
• Introduce a threshold (e.g., 5%) for large exposures to make the regime more practical and reduce the need for extensive analysis of all exposures.
• Allow flexibility in the application of look-through approaches, including the possibility of using a mix of methods.
• Define granular portfolios and treat them as separate entities to avoid unrealistic grouping.
• Ensure compatibility between the new definitions and existing internal models used by banks, particularly in the IRB framework.
• Provide adequate transition periods for banks to implement necessary changes in their information systems and procedures.

Conclusion

The EBF encourages CEBS to work closely with the banking industry to refine the guidelines and ensure they are both effective and practical. They believe that a more balanced and clear approach is needed to support the goals of the revised large exposures regime while allowing banks to maintain their lending activities and efficiency.