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14 February 2006

EAPB Position Paper on CEBS draft guidelines on AMA and IRB Approaches

The European Association of Public Banks (EAPB) issued its comments on the second draft of CEBS’ “Guidelines on the implementation, validation and assessment of Advanced Measurement (AMA) and Internal Ratings Based (IRB) Approaches”. EAPB criticizes that with respect to the provision of section 14a the guidelines high level of detail and requirements are often not practice-oriented. The provision moreover contradicts the principle of proportionality, for all institutions are subject to the guidelines.

EAPB also argues that the consistent application of directives and the convergence of supervisory practices in the EU should not lead to a high level of detail and a disproportionately costly additional administrative burden for financial institutions, particularly small banks. Moreover, it should be ensured that the guidelines do not give rise to rules going beyond what is required under the CRD since the Lamfalussy process gives CEBS no mandate to call into question, let alone modify, democratically legitimated decisions.

The guidelines should be limited to high-level principles on major issues that are relevant to ensuring a level playing field. Supervisors ought to focus on targets that should be met within the approval process, instead of prescribing detailed steps which will probably impose an additional burden on both supervisors and banks without achieving CEBS' stated objectives.

Full paper


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