EBA欧洲银行-BSG-response-to-Consultation-Paper-28EBA-CP-2015-06292019-June-2015_6页_487kb

EBA Banking Stakeholder Group Consultation Summary on Shadow Banking Exposures

Core Content

The EBA Banking Stakeholder Group (BSG) has provided general comments and replies to the Consultation Paper EBA/CP/2015/06, which outlines draft guidelines on exposures to shadow banking entities under Article 395 para 2 of Regulation (EU) No. 575/2013. The BSG supports the initiative to harmonize supervisory rules across Europe, aiming to ensure fair competition and improve efficiency for cross-border banking groups.

Main Views and Key Information

General Comments

• Regulatory Harmonization: The BSG supports the initiative to harmonize rules and practices to ensure fair competition and facilitate data sharing between European supervisors.
• Shadow Banking Complexity: The shadow banking sector is diverse and operates in parallel with the regulated banking system, but can also create systemic risks and complexity.
• Risk Transfer Concerns: There is a risk of undesirable risk transfer from the regulated sector to the shadow banking sector.
• Need for a Common Definition: A clear and consistent global definition of shadow banking is essential to avoid regulatory inconsistencies and ensure competitive neutrality.
• Operational Risks: The broad definition of shadow banking could lead to a high number of "positives" and unnecessary operational burdens.

Replies to Questions

Q1: Definition of Shadow Banking Entities

• Agreement: The BSG supports the use of a definition based on activities, as outlined in the Consultation Paper.
• Concerns: The current definition is too broad and may include highly regulated entities like UCITS and insurance companies.
• Suggestion: A more precise and operational definition is needed. The BSG suggests using a look-through principle for exposures to funds not classified as excluded undertakings and clarifying how mixed business entities should be treated.

Q2: Control and Monitoring Mechanisms

• Agreement: The BSG agrees that the process should be effective, but questions the need for specific restrictions on a broad category of shadow banking entities.
• Suggestion: The integration of concentration, interconnectedness, and specific risk monitoring within existing credit risk frameworks may be sufficient.

Q3: Oversight Arrangements

• Agreement: The BSG agrees in principle with the proposed oversight arrangements.
• Concerns: It is unclear if specific oversight is necessary for all exposures defined as shadow banking, as risks and limits are already part of the credit risk monitoring process.

Q4: Aggregate and Individual Limits

• Agreement: The BSG supports the idea of aggregate and individual limits, but questions their relevance unless there is defined interconnectedness.
• Suggestion: The updating of the "Guidelines on the identification of groups of connected clients" should be done in parallel with the shadow banking guidelines. Indirect interconnectedness is already partially addressed in BCBS guidelines.

Q5: Fall Back Approach

• Preferred Option: The BSG prefers Option 2 over Option 1 as a fall back approach.
• Reasons for Preference:
  • Incentives for Information Gathering: Option 2 encourages more detailed information collection about exposures.
  • Conservatism: It can be more conservative when applied to entities that are not directly connected, thus reducing the risk of underestimating exposures.
  • Practicality: Option 1 may be too simplistic and not reflective of the actual risk profile.
• Concerns: A technical fall back is not the only solution to address shortcomings, as alternatives like capital add-ons and SPREP (Supervisory Review and Evaluation Process) also exist.

Q6: 25% Limit for Fall Back Approach

• Agreement: The BSG believes the 25% limit is consistent with the current large exposures framework.
• Impact Assessment:
  • Option 1: May lead to a less conservative approach and potentially underestimate risk.
  • Option 2: Would provide a more robust and conservative approach, especially for entities not directly connected.

Conclusion

The BSG emphasizes the importance of a clear and consistent definition of shadow banking entities, the need for harmonized regulatory approaches, and the preference for Option 2 in the fall back approach. They suggest that the definition and oversight of shadow banking should be aligned with existing regulatory frameworks and that further work should be done to address indirect interconnectedness and ensure competitive neutrality.