CUBE RegNews:
31st July
EBA publishes stress test results
The European Banking Authority (EBA) has published the results of its 2023 EU-wide stress test, which involved 70 banks from 16 EU and EEA countries, covering 75% of the EU banking sector assets. This stress test allows supervisors to assess the resilience of EU banks over a three-year horizon under both a baseline and an adverse scenario. The adverse scenario is characterised by severe negative shocks to economic growth, higher unemployment combined with higher interest rates and credit spreads. The results of the stress test show that European banks remain resilient under the adverse scenario, when they absorb more than 496bn EUR of losses but three banks failed to meet the capital requirements outlined in the adverse scenario.
JMLSG consults on crypto transfers
The Joint Money Laundering Steering Group (JMLSG) is consulting on proposed amendments to Sector 22 (Cryptoasset providers and custodian wallet providers) in Part II of its Guidance. The proposed addition of Annex I to Sector 22 takes account of amendments relating to cryptoasset transfers (the ‘Travel Rule’) as introduced by The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022. The Travel Rule requires transfers of cryptoassets to be accompanied by certain identifiable information on the originator (the person who owns and allows the transfer of the cryptotasset) and the beneficiary (intended recipient).
Comments on the proposed revisions should be received by 25th August 2023.
OCC reminds banks of liquidity risk management
The Office of the Comptroller of the Currency (OCC) has published an addendum to the interagency policy statement on funding and liquidity risks management (was published in March 2010) which reminds banks of the importance of maintaining, assessing, and testing their contingency funding plans as part of their liquidity risk management program and activities. Amongst the recommendations in the addendum are the following:
- Depository institutions should maintain actionable contingency funding plans that consider a range of possible stress scenarios.
- Depository institutions should assess the stability of their funding and have a broad range of funding sources that can be accessed during adverse circumstances.
- Regular testing of contingency borrowing lines is necessary to ensure staff are well prepared and that these lines function as intended.
- Planning should consider the challenges involved in moving and posting collateral to access critical funding in a timely manner.
- Contingency funding plans should account for the possibility that contingency lines may become unavailable during times of stress, requiring a range of alternative funding sources.
- Depository institutions should review and update their contingency funding plans periodically and more frequently as market conditions and strategic initiatives change to address evolving liquidity risks. Institutions increasing their reliance on less stable funding should consider increasing their capacity to borrow from contingency funding sources.
AFCA consults on responsible lending complaints
The Australian Financial Complaints Authority (AFCA) is consulting on changes to responsible lending complaints in banking and finance and small business.
The consultation paper asks for feedback on AFCA’s new approach to responsible lending complaints. In particular, it seeks feedback about:
- how ACFA assess a financial firm’s compliance with responsible lending obligations;
- how ACFA determine a fair outcome where a firm breaches its responsible lending obligations; and
- how ACFC calculate loss and assess benefits to determine compensation.
The consultation ends on 11th September.
CUBE RegNews:
A selected summary of key developments for regulated financial institutions
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