BPFI Position Paper on Securitisation

BPFI prepared the Irish Securitisation Industry Working Group’s position paper on the European Parliament initial amendments to the European Commission’s two draft proposals on the Simple Transparent and Standardised Securitisation (STS) proposals. We have engaged on behalf of BPFI and the Irish Securitisation Industry Working Group to promote our position with a range of stakeholders including MEPs Paul Tang, Brian Hayes and Matt Carthy, in addition to representatives of the European Fund and Asset Management Association and Association for Financial Markets in Europe.

We are continuing to engage with these stakeholders as the (STS) amendments progress through the European Parliament.

MREL Regulatory Preparations Continue

As the European Commission prepares to issue a legislative proposal to incorporate total loss-absorbing capacity (TLAC), the EBA has published its interim report for consultation on the implementation and design of the minimum requirement for own funds and eligible liabilities (MREL) framework. Through the European Banking Federation,  BPFI is contributing to a position paper which supports the EBA proposal to align the MREL denominator with TLAC i.e. determining MREL as a percentage of risk weighted assets (RWA) with the leverage exposure as a backstop rather than the current MREL reference base of total liabilities and own funds. One of the issues which we have raised is the potential increase in capital arising from the move from total liabilities and own funds to RWAs as the MREL denominator. The forthcoming Basel changes indicate an increase in capital requirements which will affect the level of MREL if RWAs are introduced as the MREL reference base. The final EBA report must be submitted to the European Commission by end October.

European Commission Prepares for CRR/ CRD IV Review

The European Commission is preparing a review of CRR/CRD framework for November. Topics under review include the Net Stable Funding Requirement, Market Risk, Leverage Ratio, Counterparty Credit Risk, Pillar 2, Large Exposures, exposure to central counterparties and Credit Risk. The Commission has committed to looking at enhancing proportionality. However, with the exception of proportionality for remuneration, this may not be a short-term priority. The November review is expected to retain the SME Supporting Factor. The Commission has indicated that the Credit Risk and Operational Risk model reviews currently being undertaken by Basel for year-end will not be included in its CRR/CRD assessment.

EBA Consults on Payment Services Directive 2

BPFI in conjunction with members is reviewing a recently published consultation paper related to the second Payment Services Directive (PDS2). The European Banking Authority (EBA) is mandated to create Regulatory Technical Standards (RTS) & Guidelines for nine different issues in  PDS2, one of which relates to the development, in close cooperation with the European Central Bank, of strong customer authentication and secure and common communications. In August the EBA published a Consultation Paper on draft technical standards on strong customer authentication and common and secure communication under the revised PSD2. BPFI is currently working on a response ahead of the October deadline.

Banking Sector Broadly Welcomes AnaCredit Manual

Through the European Banking Federation (EBF) BPFI has broadly welcomed the draft AnaCredit Manual content which has been shared by the European Central Bank for review. AnaCredit is the ECB’s project to set up a dataset on loans to legal entities in the euro area and the recently shared manual will provide guidance on the preferred approach to meeting its reporting requirements.   Additional comments and queries collected from BPFI and other national banking associations around Europe have now been forward by the EBF to the ECB. The Central Bank of Ireland will host workshops for reporting agents on AnaCredit during September. The first full version of the AnaCredit Manual is expected in October.

Supporting IFS2020

The Federation of International Banks in Ireland (FIBI), an affiliate of BPFI, is currently promoting awareness of next year’s European Financial Forum (EFF) which is due to take place on 24th January 2017. The new Minister of State for Financial Services, Eoghan Murphy, has indicated that key themes at the upcoming event will include FinTech and Diversity. BPFI recently met with IDA Ireland to discuss additional themes for the forum and is encouraging FIBI members to highlight the event as widely as possible within their organisations.

Additionally, FIBI has recently distributed to members the Department of Finance 2017 template for actions under IFS2020. Using our members input we hope to suggest specific items for the 2017 Action Plan that will help achieve the stated target of IFS2020 – to create 10,000 net new financial services jobs. Some of the items we expect members to highlight include: engagement with Central Bank of Ireland; subsidiary banking; skills availability and attracting key people/business lines; building an environment for innovation; Brexit; double taxation treaties; value proposition and cost base; and taxation.

Improving Access to the Mortgage-to-Rent Scheme

The Government’s Action Plan for Housing and Homelessness, published in July, commits to making the Mortgage-to-Rent (MTR) scheme accessible to a higher number of borrowers. Over the summer BPFI and its members have been considering a number of proposed changes to the current process that may help increase cases to be completed. BPFI convened a meeting to discuss how best to facilitate changes while ensuring lenders’ duty of care to the borrower. At a planned meeting with the Department of Housing, Planning, Community and Local Government and the Housing Agency in September, BPFI will seek several practical changes to improve the efficiency of the process.

Post-Summer Brussels Agenda

As Brussels returns from its summer holidays negotiations are expected to begin in earnest on the Anti-Money Laundering Directive in the Council of the EU and the European Parliament, while the Parliament will also consider further its position on the Simple Transparent and Standardised Securitisation Framework. The Parliament and Council are also considering approval of a number of regulatory technical standards, including the controversial standards developed by the European Supervisory Authorities for the Packaged Retail and Investment and Insurance Products Regulation (PRIIPS). A heated political debate is expected in September in Parliament with some heavyweight MEPs believed likely to call for a rejection of PRIIPS.

Meanwhile in the European Commission work is on-going to advance legislative proposals due for publication in Q4 2016 including amendments to CRR/CRD, EMIR and establishing a regulatory framework for Central Counterparties (CPP) Recovery and Resolution. This is all alongside the preparation of two action plans which will detail legislative and non-legislative proposals to come following the outcome of the Call for Evidence and the Green Paper on Retail Financial Services. Meanwhile at a higher political level, the Heads of State will be preparing for an informal meeting without the United Kingdom in Bratislava in September  to discuss their position on Brexit and the future of the project as a group of 27 instead of 28. A full meeting of the EU 28 is scheduled for October.

Bank-funded Research on Vulnerable Customer Gets Underway

A year-long research project in the area of vulnerable customers by UCD’s National Centre for the Protection of Older Persons will begin in September. Funded by the main retail banks – AIB, Bank of Ireland, KBC, permanent tsb and Ulster – the research will examine the experience of frontline financial services staff when dealing with vulnerable customers who are the victims of financial abuse and fraud. In a related matter, a number of BPFI member banks are currently rolling out the free training package from the DCU Dementia Elevator project which educates staff on the best approach to dealing with customers presenting with possible dementia. DCU has invited BPFI and members to an awareness and training day in September.