24 August 2012

EBF response to EBA CP on draft implementing technical standards on supervisory reporting requirements for the leverage ratio

The European Banking Federation (EBF) welcomes the opportunity to respond to the EBA consultation paper on Implementing Technical standards (ITS) regarding supervisory reporting requirements for the leverage ratio.

The EBF would, therefore, like to refer to the comments that it has jointly submitted in response to the CP50 as several of those comments are also relevant within the context of CP 2012/06:

• As EBF strongly supports the European Commission’s aim to achieve a Single rulebook, EBF welcomes the proposals made in CP 2012/06 aimed at introducing uniform requirements.
• As firms will implement the proposals made in CP 2012/06 together with those made concerning the other reporting work streams mentioned above, the comments made as to the magnitude of the proposed new framework are also relevant within the context of CP 2012/06. From a practical point of view, the timing which is being proposed is unrealistic. Even if firms had unlimited resources to try and make the proposed overhaul happen, this cannot possibly be implemented as planned by the Authorities as introducing the required changes inevitably takes time. It is a strong possibility that data quality could suffer if such ambitious timelines are adhered to.
• As a consequence, the date of the first-time application of the Framework which is being proposed in CP50 needs to be postponed until 1 January 2014, at the very least. In this regard, the EBF welcomes the announcement by EBA on 31 July 2012 that the finalisation and publication of the EBA draft Implementing Technical Standards (ITS) on supervisory reporting requirements for institutions has been pushed back pending the adoption by the EU legislators of the Capital Requirements Regulation (CRR). EBF appreciates the acknowledgement that some flexibility will need to be given through phase-in provisions or on the implementation date of the new requirements.
• EBF comments below provide additional arguments explaining in particular why implementing the proposed Leverage Ratio Reporting prior to 1 January 2014 cannot possibly be envisaged.

Sufficient implementation time

In EBF's view this Consultation Paper is premature, as the final CRD IV/CRR text has been delayed and most likely will not be finalised until late autumn 2012. Given the uncertainty, EBF thinks that the consultation should have awaited the final legislation, which will need to address the implementation timetable. The delay in the final legislation will also delay the alignment of the leverage ratio reporting requirements and the final reporting templates to be used for this purpose.

A holistic review of all supervisory reporting ITS

EBF finds it important to note that while improved information will help supervisors and financial markets, the accumulation of several reporting requirements while lacking a common data definition and the relevant mapping with other requests might result in multiplication of the same or similar data in several templates and excessive reconciliation/validation efforts. Consequently, EBF suggests that EBA performs a holistic review of the overall reporting requirements once the final rules enter into force, carries out a single data definition and elimination of any duplicative templates, and then proposes the final ITS.

Further alleviation of the leverage ratio reporting burden

Regardless of the likely delay in implementation, but the uncertainly over that makes it an imperative, EBF thinks that all non-essential data items not required by the level 1 text for the calculation of the leverage ratio should be removed. In particular, the templates LR3, LR6 and LR8 should be excluded.

Continuous consultation with the industry in the test period

As the current Consultation Paper is based on the original CRD IV/CRR proposal from the European Commission, it is very important that further consultation with the industry will be undertaken once the CRD IV/CRR proposal has been finalised, in order to ensure quality and consistency in reporting and that institutions are not overburdened by the final leverage ratio reporting requirements.

Full response

© EBF