[ParlTrack]

Proposal for a regulation
Recital 8

(8) ~~In order not to unnecessarily constrain lending by institutions to corporates and private households and to prevent unwarranted adverse impacts on market liquidity, t~~The leverage ratio requirement should be set at a level where it acts as a credible backstop to the risk of excessive leverage ~~without hampering economic growth~~and it should be aligned with the institution's risk profile.

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 9

(9) TWhile the European Banking Authority (EBA) concluded in its report to the Commission19 that a Tier 1 capital leverage ratio calibrated at 3% for any type of credit institution would constitute a credible backstop function~~. A 3% leverage ratio requirement was also agreed upon at international level by~~, the OECD9a and US FDIC recommend a leverage ratio of at least 5% for institutions that are systemically important. It is therefore justified to deviate from the Basel Committee~~. T~~ and to set higher leverage ratio ~~requirement should therefore be calibrated at 3%~~s of 4%, and 6% for systemically important financial institutions. __________________ 19 Report on the leverage ratio requirement of 3 August 2016 https://www.eba.europa.eu/documents/101 80/1360107/EBA-Op-2016- 13+(Leverage+ratio+report).pdf 9a Adrian Blundell-Wignall, Paul Atkinson, 2012. ‘Deleveraging, Traditional versus Capital Markets Banking and the Urgent Need to Separate and Recapitalise G-SIFI Banks’, OECD Journal: Financial Market Trends, 03 Oct 2012, No 1, Volume: 2012, Issue: 1. pp 7–44.

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 13

(13) The Basel Committee is currently considering the introduction of a leverage ratio surcharge for globally systemically important banks (G-SIBs). The final outcome of the Basel Committee's calibration work should give rise to a discussion on the appropriate calibration of the leverage ratio for systemically important EU institutions.deleted

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 19

(19) To ensure the effectiveness of the requirement on own funds and eligible liabilities, it is essential that the instruments held for meeting that requirement have a high capacity of loss absorption. Liabilities that are excluded from the bail-in tool referred to in Directive 2014/59/EU do not have that capacity, and neither do other liabilities that, although bail-in-able in principle might raise difficulties for being bailed in in practice. Those liabilities should therefore not be considered eligible for the requirement on own funds and eligible liabilities. On the other hand, capital instruments, as well as subordinated liabilities have a high loss absorption capacity. ~~Also, the loss absorption potential of liabilities that rank pari passu with certain excluded liabilities should be recognised up to a certain extent, in line with the TLAC standard.~~

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 33

(33) ~~The implementation of the FRTB standards in the Union needs to preserve the good functioning of financial markets in the Union.~~ Recent impact studies about the FRTB standards show that the implementation of the FRTB standards is expected to lead to a steep increase in the overall own fund requirement for market risks. To avoid ~~a sudden contraction of trading businesses~~negative effects for the real economy in the Union, a phase-in period should therefore be introduced so that institutions can recognise the overall level of own fund requirements for market risks generated by the transposition of the FRTB standards in the Union. Particular attention should also be paid to European trading specificities and adjustments to the own funds requirements for sovereign and covered bonds~~, and simple, transparent and standardised securitisations~~.

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 38

(38) The NSFR should be expressed as a percentage and set at a minimum level of 100%, and 120% for G-SIIs, which indicates that an institution holds sufficient stable funding to meet its funding needs during a one-year period under both normal and stressed conditions. Should its NSFR falls below the ~~100%~~ levels, the institution should comply with the specific requirements laid down in Article 414 of Regulation (EU) No 575/2013 for a timely restoration of its NSFR to the minimum level. The supervisory measures in case of non- compliance should not be automatic, competent authorities should instead assess the reasons for non-compliance with the NSFR requirement before defining potential supervisory measures.

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 39

(39) In accordance with the recommendations made by EBA in its report of 15 December 2015 prepared pursuant to paragraphs 1 and 2 of Article 510 of Regulation (EU) No 575/2013, the rules for calculating the NSFR should be closely aligned with the Basel Committee's standards, including developments in those standards regarding the treatment of derivatives transactions. The necessity to take into account some European specificities to ensure that the NSFR does not hinder the financing of the European real economy however justifies adopting some limited adjustments to the Basel NSFR for the definition of the European NSFR. Those adjustments due to the European context are recommended by the NSFR report prepared by EBA and relate mainly to specific treatments for i) pass- through models in general and covered bonds issuance in particular; ii) trade finance activities; iii) centralised regulated savings; iv) residential guaranteed loans; and v) credit unions. These proposed specific treatments broadly reflect the preferential treatment granted to these activities in the European LCR compared to the Basel LCR. Because the NSFR complements the LCR, those two ratios should indeed be consistent in their definition and calibration. This is in particular the case for required stable funding factors applied to LCR high quality liquid assets for the calculation of the NSFR that shall reflect the definitions and haircuts of the European LCR, regardless of compliance with the general and operational requirements set out for the LCR calculation that are not appropriate in the one-year frame of the NSFR calculation.

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 53

(53) IPublic investments in infrastructure are essential to strengthen Europe's competitiveness and to stimulate job creation. The recovery and future growth of the Union economy depends largely on the availability of capital for strategic investments of European significance in infrastructure, notably broadband and energy networks, as well as transport infrastructure, particularly in industrial centres; education, research and innovation; and renewable energy and energy efficiency. The Investment Plan for Europe aims at promoting additional funding to viable infrastructure projects through, inter alia, the mobilization of additional private source of finance. For a number of potential investors the main concern is the perceived absence of viable projects and the limited capacity to properly evaluate risk given their intrinsically complex nature.

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Recital 54

(54) In order to encourage public and private investments in infrastructure projects ~~it is therefore essential to lay down a~~the prudential regulatory environment ~~that is ab~~can play a role toin promoteing high quality infrastructure projects ~~and reduce risks for investors~~. In particular capital charges for exposures to infrastructure projects should be reduced provided they comply with a set of strict criteria able to reduce their risk profile and enhance predictability of cash flows. The Commission should review the provision by [three years after the entry into force] in order to assess a) its impact on the volume of infrastructure investments by institutions and the quality of investments having regard to EU's objectives to move towards a low-carbon, climate-resilient and circular economy; and b) its adequacy from a prudential standpoint. ~~The Commission should also consider whether the scope should be extended to infrastructure investments by corporates.~~

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 27

Regulation (EU) No 575/2013
Article 72a – paragraph 2 – point j – point ii

(ii) a commercial or trade creditor, where the liability arises from the provision to the institution or the parent undertaking of goods or services that are critical to the daily functioning of the institution's or parent undertaking's operations, including IT services, utilities and the rental, servicing and upkeep of premises; and the creditor is not itself an institution as defined by Art. 4(1) of this Regulation;

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 27

Regulation (EU) No 575/2013
Article 72b – paragraph 2 – point b – point ii a (new)

(iia) retail clients as defined by Art 4 (1) (11) of Directive 2014/65/EU.

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 27

Regulation (EU) No 575/2013
Article 72b – paragraph 3

3. In addition to the liabilities referred to in paragraph 2, liabilities shall qualify as eligible liabilities instruments up to an aggregate amount that does not exceed 3.5% of the total risk exposure amount calculated in accordance with paragraphs 3 and 4 of Article 92, provided that: (a) paragraph 2 except for the condition in point (d) are met; (b) the liabilities rank pari passu with the lowest ranking excluded liabilities referred to in Article 72a(2); and (c) eligible liabilities items does not have a material adverse impact on the resolvability of the institution, as confirmed by the resolution authority after having assessed the elements referred to in points (b) and (c) of Article 45b(3) of Directive 2014/59/EU. An institution may decide not to include in eligible liabilities items the liabilities referred to in the first subparagraph.deleted all the conditions laid down in the inclusion of these liabilities in

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 27

Regulation (EU) No 575/2013
Article 72b – paragraph 4

4. Where an institution takes a decision as referred to in the second subparagraph of paragraph 3, liabilities shall qualify as eligible liabilities instruments in addition to the liabilities referred to in paragraph 2, provided that: (a) to include in eligible liabilities items liabilities referred to in the first subparagraph of paragraph 3 is effective, in accordance with paragraph 5; (b) paragraph 2, except for the condition in point (d) of that paragraph, are met; (c) are senior to the lowest ranking excluded liabilities referred to in Article 72a(2); (d) institution, the amount of the excluded liabilities referred to in Article 72a(2) which rank pari passu or below those liabilities in insolvency does not exceed 5% of the amount of the own funds and eligible liabilities of the institution; (e) eligible liabilities items does not have a material adverse impact on the resolvability of the institution, as confirmed by the resolution authority after having assessed the elements referred to in points (b) and (c) of Article 45b(3) of Directive 2014/59/EU.deleted the decision by the institution not all the conditions laid down in the liabilities rank pari passu or on the balance sheet of the the inclusion of those liabilities in

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 27

Regulation (EU) No 575/2013
Article 72b – paragraph 5

5. The decision referred to in the second sub-paragraph of paragraph 3 shall specify whether the institution intends either to include the liabilities referred to in paragraph 4 in eligible liabilities items or not to include any of the liabilities referred to in paragraphs 3 and 4. An institution may not decide to include liabilities referred to in both paragraphs 3 and 4 in eligible liabilities items. The decision shall be published in the annual report and shall take effect 6 months after the publication of that report. The decision shall be effective for at least one year.deleted

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 27

~~6. The competent authority shall consult the resolution authority when examining whether the conditions of this Article are fulfilled.~~deleted

2018/02/02
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 39 – point a

Regulation (EU) No 575/2013
Article 92 – paragraph 1 – point d

(d) a leverage ratio of ~~3%.~~6% for G-SIIs.

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 39 – point a a (new)

Regulation (EU) No 575/2013
Article 92 – paragraph 1 – point d a (new)

(aa) in paragraph 1, the following point (da) is added: "(da) a leverage ratio of 4%. for O- SIIs."

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 39 – point a b (new)

Regulation (EU) No 575/2013
Article 92 – paragraph 1 – point d b (new)

(ab) in paragraph 1, the following point (db) is added: "(db) a leverage ratio of 3% for all other institutions."

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 40

Regulation (EU) No 575/2013
Article 92 a – title

Article 92a G-SII and O-SII Requirement for own funds and eligible liabilities

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 40

Regulation (EU) No 575/2013
Article 92 a – paragraph 1 – introductory part

1. Subject to Articles 93 and 94 and to the exceptions set out in paragraph 2 of this Article, institutions identified as resolution entities and that are a G-SII or an O-SII or part of a G- SII or O-SII shall at all times satisfy the following requirements for own funds and eligible liabilities:

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 40

Regulation (EU) No 575/2013
Article 92 a – paragraph 2 – point a

(a) within ~~the thre~~one years following the date on which the institution or the group of which the institution is part has been identified as a G-SII or O-SII;

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 40

Regulation (EU) No 575/2013
Article 92 a – paragraph 3

3. Where the aggregate resulting from the application of the requirements laid down in point (a) of paragraph 1 to each resolution entity of the same G-SII or O- SII exceeds the requirement of own funds and eligible liabilities calculated in accordance with Article 12, the resolution authority of the EU parent institution may, after having consulted the other relevant resolution authorities, act in accordance with Articles 45d(3) or 45h(1)of Directive 2014/59/EU.

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 40

Regulation (EU) No 575/2013
Article 92 a – paragraph 3 a (new)

3a. The requirements for G-SII as laid down in paragraph 1 of this Article shall be multiplied with the following factors: (a) 1,2 in the period from [date of application of this Article + 1 year] to [date of application of this Article + 2 years - 1 day] (b) 1,4 in the period from [date of application of this Article +2 years] to [date of application of this Article +3 years - 1 day]; (c) 1,6 in the period from [date of application of this Article +3 years] to [date of application of this Article +4 years - 1 day]; (d) 1,8 in the period from [date of application of this Article +4 years] to [date of application of this Article +5 years - 1 day].

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 40

Regulation (EU) No 575/2013
Article 92 b – title

Article 92b Non-EU G-SII and O-SII Requirement for own funds and eligible liabilities

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 40

Regulation (EU) No 575/2013
Article 92 b – subparagraph 1

Institutions that are material subsidiaries of non-EU G-SIIs and that are not resolution entities shall at all times satisfy a requirement for own funds and eligible liabilities equal to 9100% of the requirements for own funds and eligible liabilities laid down in Article 92a.

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 42

Regulation (EU) No 575/2013
Article 99 – paragraph 11

11. Competent authorities may waive the requirements to report data items specified in the implementing technical standards referred to in this Article and Articles 100, 101, 394, 415 and 430 ~~where~~, or allow the institution to report in another reporting format, if: (a) those data items are already available to the competent authorities by means other than those specified under the above mentioned implementing ~~technical~~ standards, including where that information is available to the competent authorities in a different format~~s or levels of granularity.~~; the competent authority may then only grant the waiver or exception stated in this paragraph if data received or collated through such alternative methods are identical to those data points which otherwise ought to be reported in accordance with the respective implementing standards; (b) the data points or formats have not been updated in accordance with the amendments to this Regulation within an appropriate time period before the deadline for the data to be reported.

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 48

Regulation (EU) No 575/2013
Article 104 – paragraph 2 – point e

(e) fin~~ancial assets or liabilities measured at fair value~~struments held as accounting trading assets or liabilities;

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN

Proposal for a regulation
Article 1 – paragraph 1 – point 84

Regulation (EU) No 575/2013
Article 325 a i – table 4 – column Sector – row Bucket 4

Table 4 Financial sector entities including credit institutions incorporated or established by a central government, a regional government or a local authority and promotional lenders , excluding public sector entities as defined in Art 4 (8) of Regulation EU 575/2013

2018/02/05
Committee: ECON

Matt CARTHY, Martin SCHIRDEWAN