2015年-EBA欧洲银行管理局_European_Banking_Authority_Banking_Stakeholder_Group-_Position_paper_on_proportionality_58页_1mb

Summary of "Proportionality in Bank Regulation" by the EBA Banking Stakeholder Group

Core Content

This report by the EBA Banking Stakeholder Group (BSG) explores the Principle of Proportionality in bank regulation, emphasizing its importance in ensuring that regulatory measures are both effective and efficient. The BSG argues that while regulation is essential for maintaining bank safety, systemic stability, and consumer protection, it must be applied in a manner that avoids unnecessary burdens on banks and their stakeholders.

The report outlines an analytical framework to assess proportionality, identifying five key dimensions (or pillars) that should guide the application of this principle:

• Objectives: Ensuring that regulation aligns with its intended goals and that cost-benefit analysis is central to its design.
• The totality of regulation: Considering the cumulative impact of regulations on the financial system.
• Excess complexity: Avoiding overly complicated rules that increase compliance costs.
• Differentiation: Tailoring regulations to the size, complexity, and business model of institutions.
• Materiality: Applying regulations only where they are relevant to the issue at hand.

Main Views

The BSG believes that the Principle of Proportionality has not always been fully applied in the EU regulatory framework. They highlight that excessive regulation can lead to:

• Higher compliance costs for banks, especially smaller ones, potentially limiting their ability to support the real economy.
• Negative impacts on competition, as smaller institutions and new market entrants may be disproportionately affected.
• Disintermediation of funds to less-regulated entities or capital markets, which could destabilize the financial system.
• Reduced efficiency in financial intermediation and increased costs for customers.

They also stress that proportionality is not a legal obligation per se, but rather a guiding principle that should be applied throughout the legislative and regulatory process. It is particularly important in the context of the Better Regulation Agenda of the European Commission, which aims to ensure that regulations are clear, effective, and not burdensome.

Key Information

Legal Definition

• The Principle of Proportionality is a general principle of EU law, established by the European Court of Justice and later enshrined in the Treaty of the European Union.
• It requires that Union actions must not exceed what is necessary to achieve their objectives.
• The principle has three key elements: suitability, necessity, and proportionality (stricto sensu).
• It allows for differentiated regulation but does not justify complete non-application of requirements.

Economic Perspective

• Proportionality is about balancing the costs and benefits of regulation.
• It is important to consider cumulative effects of regulation on the broader economy.
• Excess complexity can lead to disproportionate compliance costs and hinder financial innovation.

Application in Case Studies

The report identifies six key areas where proportionality has been challenged:

1. Supervisory Reporting

   • Includes issues such as sub-consolidation, funding plan reporting, and directorship disclosure.
   • Solo vs. consolidated reporting for Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NFSR) is a point of concern.

2. Liquidity Requirements

   • Focuses on the recognition of liquid assets from Centralised Internal Unit (CIU) and the impact of liquidity reporting.

3. External Models

   • Highlights the need for proportionality in the use of external models for risk assessment.

4. Governance of Risk Models

   • Discusses the role of the board of directors and control functions in risk model governance.

5. Leverage Ratio

   • Examines the impact of the leverage ratio on different types of banks.

6. Corporate Governance

   • Includes board mandates and remuneration, board organisation, and committees.

Costs and Impacts

• The cost of regulation is passed on to consumers through higher fees and margins.
• Non-proportional regulation can compromise the competitive position of smaller banks.
• Impact assessments are essential tools to ensure proportionality, including cost-benefit analysis, compliance cost analysis, and multi-criteria analysis.

Recommendations

The BSG proposes several key recommendations to improve the application of proportionality in bank regulation:

• A harmonised, horizontal ESAs guideline on the principle of materiality should be developed.
• A high-level task force should be established by the European Commission to systematically address proportionality issues and propose implementation actions.
• Regular independent reviews of regulatory complexity and proportionality should be conducted.
• A systematic review of supervisory reporting requirements should be undertaken to remove unnecessary duplication.
• Impact assessments should be proportionate to the issue and cover both individual regulations and their cumulative effects.
• Cost-benefit analysis should be integrated early in the policy cycle and be a continuous process.

Conclusion

The report concludes that proportionality is a central theme in the reform of bank regulation post-financial crisis. It is not only a legal principle but also an economic necessity to ensure that the financial system remains efficient, competitive, and supportive of economic growth. The BSG advocates for greater awareness, systematic application, and improved implementation of proportionality in all regulatory and supervisory processes.