EBA欧洲银行-EBA-ITS-2014-06-28Final-draft-ITS-on-Joint-Decisions-on-Internal-Models29_31页_490kb

EBA Final Draft Implementing Technical Standards on Joint Decisions

Core Content

The EBA Final Draft Implementing Technical Standards (ITS) outlines the procedures for the joint decision process that competent authorities must follow when assessing applications for prudential permissions to use internal models for credit, counterparty, operational, and market risk calculations, as specified in Article 20 of Regulation (EU) No 575/2013 (CRR). These standards aim to ensure timely, efficient, and consistent cooperation among supervisory authorities and to promote transparency and mutual trust in the decision-making process.

Main Aspects Covered

• Involvement of third-country supervisory authorities: If a group operates in a third country and intends to use internal models for exposures in that country, the consolidating supervisor may invite third-country authorities to participate in the assessment. However, this requires express consent from the relevant competent authorities before sharing their reports with third countries.

• Assessment of application completeness:

  • The consolidating supervisor must forward the application to relevant competent authorities within ten days of receipt.
  • The assessment of completeness must be completed within six weeks of the application's receipt.
  • If the application is deemed complete, the six-month joint decision period starts from the date of receipt by the consolidating supervisor, not from the date of the completeness assessment.
  • The consolidating supervisor must inform the applicant of any incomplete elements and allow them to submit missing information.

• Planning of the joint decision process:

  • A timetable must be agreed upon before the process begins, and it should reflect the scope, complexity, and proportionality of the application.
  • The timetable must be set within six weeks of receiving a complete application and must include key steps such as dialogue with the applicant, submission of assessment reports, and preparation of the draft joint decision.
  • The division of work among authorities is based on the scope and complexity of the application, the materiality of the changes or extensions, and the geographical location of exposures or risks.

• Joint decision document:

  • Must include details on the authorities involved, the group entities affected, the opinion on granting permission, the date of model use, and the assessment report.
  • It must also include terms and conditions for the permission and recommendations for model improvements.

• Process when joint decision is not reached:

  • The consolidating supervisor must communicate its decision in writing to the applicant and relevant competent authorities.
  • This ensures transparency and clarity in the absence of a joint decision.

Key Provisions and Procedures

• Timelines:

  • The joint decision period is six months from the date of receipt of a complete application.
  • The assessment of completeness must be completed within six weeks of application receipt.
  • The timetable must be established within six weeks of the application being deemed complete.

• Cooperation and communication:

  • Home-host cooperation is emphasized, particularly in cases involving third-country authorities.
  • Dialogue between the consolidating supervisor, competent authorities, and the applicant is required at various stages to ensure mutual understanding and efficient decision-making.
  • The consolidating supervisor is responsible for coordinating the process and ensuring proportionality in the allocation of resources and time.

• Assessment reports:

  • Each competent authority must provide an assessment report to the consolidating supervisor.
  • The report must include:
    • An opinion on granting the requested permission.
    • Terms and conditions of the permission, with corresponding reasoning and timetable.
    • Assessments of the matters required by the CRR and related delegated regulations.
    • Recommendations for addressing any deficiencies found during the assessment.

• Material extensions or changes to internal models:

  • The joint decision process for material changes or extensions must be proportionate to the scope of the change.
  • The division of work and timeline are adjusted accordingly to reflect the complexity of the model modifications.

Impact Assessment and Stakeholder Feedback

• The EBA has considered public consultation feedback and made adjustments to the draft ITS, particularly in clarifying the difference between terms and conditions and recommendations in the joint decision document.
• The repeal of GL10 (Guidelines on the implementation, validation and assessment of AMA and IRB approaches) is included, as the new ITS will replace these guidelines.

Conclusion

The EBA Final Draft ITS establishes a structured and transparent joint decision process for prudential permissions to use internal models. It ensures cooperation, clarity, and consistency among supervisory authorities, both within and outside the EU, and supports the effective supervision of financial institutions using these models.