This final report proposes amendments to the guidelines on the disclosure of global systemically important institutions (G-SIIs) indicators. It aims to align international standards with the EU regulatory framework by incorporating updates from the Basel Committee on Banking Supervision. The new guidelines also clarify the cross-jurisdictional indicators to be used for identification and disclosure, which should…
This document is the final report published by the European Banking Authority (EBA) in December 2023. It is an amended guide (EBA/GL/2023/10) modifying the EBA guidelines EBA/GL/2020/14 relating to the specification and disclosure of indicators of the systemic importance of global systemically important institutions (G-SIIs). The scope covers global systemically important banks within the European Union, in connection with the international standards of the Basel Committee (BCBS). The document concerns the update of indicators and reporting templates for the 2023 identification exercise, based on 2022 data, as well as clarifications regarding cross-border indicators related to the Single Resolution Mechanism (SRM).
The document addresses the update of the EBA guidelines for the identification and disclosure of indicators of global systemically important financial institutions (G-SIIs) in the EU. This update aims to align European requirements with the latest version of the data model published by the Basel Committee in January 2023, based on end-2022 data, to ensure consistency between international standards and the European regulatory framework (p. 3). Furthermore, it clarifies the consideration of cross-border indicators related to the Single Resolution Mechanism (SRM) in calculation and disclosure, specifying that these data should not be considered as “memorandum” or “auxiliary” for G-SIIs identification (p. 3-4). The document recalls that the reporting instructions published annually on the EBA website must be followed by the concerned entities, notably those exceeding the defined materiality threshold (p. 3-4). The public consultation lasted one month, in line with the technical and expected nature of these amendments, with no modifications following feedback (p. 3, 21). The amended guidelines will enter into force on May 20, 2024, with an obligation for competent authorities to notify their compliance within two months following the publication of official translations (p. 3, 8, 9). The guide notably updates the annexed reporting model, detailing indicators of size, interconnectedness, substitutability, complexity, and cross-border activity, as well as auxiliary and memorandum data (p. 12-20). In conclusion, these amendments ensure European regulatory harmonization compliant with international standards, facilitate transparency, and reduce administrative burden by avoiding duplication of reporting (p. 21).
The initial guidelines EBA/GL/2020/14 rely on the Basel Committee (BCBS) methodology to identify global systemically important banks (G-SIBs). Since 2018, the BCBS has updated its framework, notably in response to the Covid-19 pandemic, postponing the implementation of revisions and removing the collection of certain memorandum data (p. 4). In 2022, the BCBS recognized the specificities of the European Banking Union (EBU) and the Single Resolution Mechanism (SRM), leading to the introduction of an adjusted global score for G-SIIs incorporating these particularities (p. 4). A targeted amendment in 2022 introduced paragraph 10a in the EBA guidelines to integrate SRM cross-border indicators into score calculations, without considering them as auxiliary or memorandum (p. 4). However, this rapid revision did not allow a full update. This document thus aims to update the reporting model according to the latest BCBS version from end 2022, clarify the SRM cross-border indicators to be used, and specify reporting and disclosure obligations (p. 4-5). The objective is to ensure regulatory consistency, transparency, and reduction of administrative burdens, while respecting European legal requirements, notably Article 6a of Implementing Regulation (EU) 2021/637 (p. 5). The public consultation was shortened to one month due to the technical and expected nature of the modifications (p. 5).
Methodology and international alignment:
- The G-SIIs identification methodology follows the BCBS approach for G-SIBs, with an annual update of the data model (p. 3-4).
- The guidelines annex reproduces the Basel reporting model, with minor adaptations for the EU (p. 10).
Cross-border indicators and SRM:
- Introduction of paragraph 10a clarifying that data related to cross-border activities within the SRM framework must be integrated into cross-border activity indicators and not considered as auxiliary or memorandum (p. 3, 4, 10).
- This provision responds to Article 131(2a) of Directive 2013/36/EU and the BCBS agreement of May 2022 (p. 4, 10).
Reporting and disclosure:
- Competent authorities and concerned entities must follow the reporting instructions published annually on the EBA website (p. 3, 10).
- Data must be collected as of December 31 each year and published on entities’ websites within four months after the fiscal year-end, once the identification threshold is exceeded (p. 10-11).
- Entities must identify themselves via their Legal Entity Identifier (LEI) upon submission (p. 11).
Indicator structure:
- The reporting model includes 22 sections covering:
- Size (total exposures, including insurance subsidiaries) (p. 12-13).
- Interconnectedness (intra-financial assets and liabilities) (p. 13-14).
- Substitutability and financial infrastructure (payments, custody assets, underwriting, trading volumes) (p. 14-15).
- Complexity (OTC derivatives, held securities, level 3 assets) (p. 15-16).
- Cross-border activity (cross-border claims and liabilities, SRM indicators) (p. 16-18).
- Auxiliary and memorandum data for data quality and methodological development (p. 16-19).
Compliance and implementation:
- The guidelines are addressed to competent authorities and concerned financial institutions (p. 9).
- They apply from May 20, 2024, replacing the previous 2022 amendments (p. 9).
- Authorities must notify their compliance to the EBA within two months following the publication of official translations (p. 8).
Public consultation and impact:
- The consultation lasted one month, with a single irrelevant response, no text modifications (p. 21).
- The model update involves no major policy choices but simplifies reporting and avoids duplication of administrative burdens (p. 21).
- Not updating would have complicated reporting and reduced transparency (p. 21).
Findings:
- The BCBS published in January 2023 a new version of the data model for G-SIBs identification, based on end-2022 data (p. 3).
- The EBA adapted its guidelines to integrate this model, ensuring regulatory consistency within the EU (p. 3-4).
- Cross-border indicators related to the SRM must be integrated into cross-border activity indicator calculations and not considered as auxiliary or memorandum (p. 3-4, 10).
- Entities exceeding the materiality threshold must provide these data annually, with public disclosure within four months following the fiscal year-end (p. 10-11).
Assumptions:
- Compliance with reporting instructions published on the EBA website is assumed by all concerned entities (p. 3, 9).
- The update of the guidelines does not change costs and benefits already established in previous versions (p. 21).
Interpretations:
- Alignment with BCBS standards improves transparency and reduces administrative burden by avoiding duplication of reporting (p. 21).
- Clarification on SRM indicators responds to the specificities of the European Banking Union and facilitates more precise identification of G-SIIs (p. 4).
Uncertainties:
- The document does not explicitly address potential impacts on the classification of entities as G-SIIs following these modifications.
- Future evolution of BCBS standards may require further guideline updates.
The EBA concludes that updating the guidelines is necessary to maintain consistency between international standards and the European regulatory framework, notably by integrating the latest BCBS data model version and clarifying the consideration of SRM cross-border indicators (p. 3-4, 21). The amendments are technical and targeted, facilitating compliance by entities and competent authorities without increasing administrative burden (p. 21). The document recommends that all competent authorities and concerned entities apply these guidelines from May 20, 2024, respecting the reporting instructions published annually on the EBA website (p. 8-11). It is also emphasized that SRM-related data must be integrated into cross-border activity indicators and publicly disclosed, in accordance with European legal requirements (p. 10). Finally, notification of compliance by competent authorities to the EBA is mandatory within two months following the publication of official translations (p. 8).
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