Banking and Finance

Issue 1136 / 18 November 2021


  • Climate-related financial risks - Basel Committee publishes Consultation Paper
  • CRR - Commission Implementing Regulation on mapping tables published in OJ
  • Securitisation Regulation - ECB consults on draft Guide on securitisation transaction notification
  • Domestic liquidity sub-groups - PRA publishes Policy Statement
  • Debt packagers - FCA publishes Consultation Paper
  • APP scams - PSR publishes Consultation Paper

Committee on Payments and Market Infrastructures

Real-time gross settlement systems - CPMI publishes Consultative Report - 18 November 2021

The Committee on Payments and Market Infrastructures (CPMI) has published a Consultative Report on extending and aligning payment system operating hours for cross-border payments.

The Consultative Report focuses on the operating hours of real-time gross settlement (RTGS) systems, which are considered key to enhancing cross-border payments. It explains that an extension of RTGS operating hours across jurisdictions could help address current obstacles, increasing the speed of cross-border payments and reducing both liquidity costs and settlement risks.

The Consultative Report sets out three potential improvements (‘end states’), based on an analysis of 62 RTGS systems worldwide:

  • end state 1: increase operating hours on current operating days, to help close daily gaps in RTGS operating hours, primarily on standard working days as most jurisdictions’ RTGS systems are closed on weekends and public holidays;
  • end state 2: extend operations to additional days on which many RTGS systems do not currently operate, to close the gaps created by holidays and weekends; and
  • end state 3: extend operating hours to 24/7, to largely remove frictions for cross-border payments arising from gaps in opening times.

The deadline for comments is 14 January 2022.

CPMI Consultative Report: Extending and aligning payment system operating hours for cross-border payments


Press release

Basel Committee on Banking Supervision

Climate-related financial risks - Basel Committee publishes Consultation Paper - 16 November 2021

The Basel Committee on Banking Supervision (Basel Committee) has published a Consultation Paper (BCBS530) on principles for the effective management and supervision of climate-related financial risks. The proposed principles seek to provide a common baseline for internationally active banks and prudential supervisors, while maintaining sufficient flexibility given the degree of heterogeneity and evolving practices in this area.

The Consultation Paper sets out 18 high-level principles. Principles 1 to 12 provide banks with guidance on effective management of climate-related financial risks. Principles 13 to 18 provide guidance to prudential supervisors. The principles focus on areas including: (i) corporate governance; (ii) internal control frameworks; (iii) capital and liquidity adequacy; (iv) risk management processes; and (v) management monitoring and reporting.

The Basel Committee intends to monitor implementation of the principles across member jurisdictions to promote a common understanding of expectations, support the development of harmonised practices and facilitate implementation as soon as possible.

The consultation closes on 16 February 2022.

BCBS Consultation: Principles for the effective management and supervision of climate-related financial risks


Press release

European Commission

European Payment Institutions Federation - Commissioner McGuinness delivers speech at annual conference - 16 November 2021

The European Commission has published the keynote speech given by the European Commissioner for Financial Stability, Financial Services and the Capital Markets Union, Mairead McGuinness, at the European Payment Institutions Federation Annual Conference.

The speech considered developments in the EU payments market and covered a number of areas, including:

  • review of the Payment Services Directive 2 (PSD2): the Commission’s ongoing review of PSD2 is considering a number of issues, including the scope of the Directive, how well Open Banking is working and how to move to Open Finance. The European Banking Authority (EBA) will input into the review by way of a call for advice (see the item below in this section) and the Commission will launch a consultation in early 2022, on which it will report by the end of 2022;
  • central bank digital currencies and the digital euro: the European Central Bank (ECB) has launched an investigation phase into a digital euro and the Commission is working closely with it on the possible impact and ‘far-reaching’ implications for the financial system;
  • instant payments: the Commission wants to see full take up of instant payments across EU member states and for these to become the norm across the EU – currently two thirds of payment service providers are set up to offer and receive instant payments. The Commission’s 2020 review identified four ‘major’ roadblocks to full take up: critical mass; consumer protection; pricing; and sanctions screening. The Commission will deliver an initiative on instant payments in 2022 and will take all necessary action to accelerate the rollout of instant payments, including legislation; and
  • Settlement Finality Directive (SFD) and Digital Markets Act: the Commission is considering extending the scope of the SFD to e-money and payment institutions. It is using the Digital Markets Act to address the restrictions on the use of near field communications technology in mobile wallets.

Keynote speech: European Payment Institutions Federation Annual Conference

Official Journal of the European Union

CRR - Commission Implementing Regulation on mapping tables published in OJ - 17 November 2021

Commission Implementing Regulation (EU) 2021/2005 (the Regulation) has been published in the Official Journal of the European Union (OJ). The Regulation lays down implementing technical standards amending Commission Implementing Regulation (EU) 2016/1799 in relation to the mapping tables specifying the correspondence between the credit risk assessments of external credit assessment institutions (ECAIs) and the credit quality steps set out in the Capital Requirements Regulation ((EU) 575/2013). The Regulation was made under Article 136(1) of the CRR.

The Regulation is based on draft Implementing Technical Standards (ITS) that the Joint Committee of the European Supervisory Authorities submitted to the European Commission in June 2021. It amends Commission Implementing Regulation (EU) 2016/1799 to account for:

  • changes in the quantitative and qualitative factors underpinning the credit assessments of some mappings;
  • some ECAIs extending their credit assessments to new market segments, resulting in new rating scales and new credit rating types;
  • two credit rating agencies being registered in accordance with Articles 14 to 18 of the Credit Rating Agency Regulation ((EC) 1060/2009) and two ECAIs being deregistered; and
  • one registered ECAI amending the symbols used to denote the rating categories of its rating scales.

The Regulation will enter into force on 7 December 2021.

Commission Implementing Regulation (EU) 2021/2005 laying down implementing technical standards amending Implementing Regulation (EU) 2016/1799 as regards the mapping tables specifying the correspondence between the credit risk assessments of external credit assessment institutions and the credit quality steps set out in Regulation (EU) 575/2013 of the European Parliament and of the Council 

European Banking Authority

ESEP and EREP - EBA publishes two programmes - 12 November 2021

The European Banking Authority (EBA) has published its 2022 European Supervisory Examination Programme (ESEP) for prudential supervisors (EBA/REP/2021/33), together with its first European Resolution Examination Programme (EREP) for resolution authorities (EBA/REP/2021/32), also for 2022. The ESEP and EREP are part of a coordinated initiative to enhance convergence in Europe. Previously, the key priorities for prudential supervisors were put forward by the EBA in its annual Convergence Report. The ESEP and EREP replace this method as stand-alone programmes.

In its ESEP, the EBA has identified five key topics for prudential supervisors to consider when selecting their 2022 supervisory priorities: (i) the impact of COVID-19 on asset quality and adequate provisioning; (ii) information and communication technology (ICT) security and outsourcing risks, and risk data aggregation; (iii) digital transformation and the regulation of fintech firms; (iv) environmental, social and governance (ESG) risk; and (v) anti-money laundering and counter-terrorism financing (AML/CFT). Supervisory colleges are expected to implement these topics through the sharing and discussion of relevant supervisory assessments and outcomes.

In its EREP, the EBA has set out three key topics for resolution authorities to consider when selecting their 2022 priorities: (i) how shortfalls in relation to the minimum requirement for own funds and eligible liabilities (MREL) are being addressed; (ii) the development of management information systems for valuation in resolution; and (iii) preparations for managing liquidity needs in resolution. Resolution colleges are expected to consider these topics.

The EBA will follow up on how the ESEP and EREP key topics should be embedded in national competent authorities’ priorities for 2022 and reflected in their activities throughout the year.

2022 European Supervisory Examination Programme (ESEP) for Prudential Supervisors

ESEP press release

EBA 2022 – European Resolution Examination Programme (EREP)

EREP press release


NSFR – EBA publishes report on the functioning of precious metals markets - 17 November 2021

The EBA has published a report on the impact of the net stable funding ratio (NSFR) on the functioning of precious metals markets.

The EBA published the report in line with the mandate in Article 510(11) of the Capital Requirements Regulation II ((EU) 2019/876) (CRR II) as it amends Article 510 of the Capital Requirements Regulation (EU) 575/2013 (CRR). The report assesses whether it would be justified to reduce the required stable funding factor for assets used for providing clearing and settlement services or assets used for providing financing transactions in relation to precious metals.

The report draws on information collected by the Basel Committee on Banking Supervision and the EBA under the quantitative impact study (QIS) project. It highlights that banks started to comply with the new liquidity requirements well in advance of their entry into force. During the period 2011–2019, banks analysed in the QIS project cleared the shortfall of stable funding needed to comply with the NSFR. In the same period, based on the information publicly available from the website of the London Bullion Market Association, there is no evidence that this adjustment had an impact on precious metals markets.

Based on the EBA QIS and COREP data, the amount of physically traded commodities reported by the banks was found to be negligible when compared with market volumes. Also, the requirement for stable funding generated by these assets is limited in comparison with the total amount of required stable funding; a reduction of the weighting factor assigned to these assets would have limited impact on the banks; and, in particular, it would not make the NSFR less stringent.

EBA report on the impact of the NSFR on the functioning of the precious metals market under the mandate in Article 510(11) of Regulation (EU) 2019/876

Press release


PSD2 - European Commission publishes call for advice - 18 November 2021

The European Commission has published a letter addressed to the EBA seeking advice in relation to the Payment Services Directive (EU) 2015/2366 (PSD2). The Commission requests the EBA to gather evidence on the application and impact of PSD2, including the benefits, challenges and areas where amendments may be appropriate. Specific areas on which the Commission seeks advice include:

  • the scope, and definitions in, PSD2;
  • licensing of payment institutions (PIs) and supervision of payment service supervisors;
  • transparency conditions and information requirements;
  • strong customer authentication;
  • access to and use of payment accounts data in relation to payment initiation services and account information services;
  • access to payment systems and accounts maintained with credit institutions; and
  • enforcement of PSD2 requirements.

The Commission intends to use the EBA’s advice to inform a report reviewing PSD2 that it is required to give to the European Parliament, the Council of the EU, the European Central Bank and the European Economic and Social Committee. This report may be accompanied by legislative proposals if appropriate.

The Commission has set a deadline of 30 June 2022 for the EBA to deliver its advice.

Letter from the Commission to the EBA

Call for advice

European Central Bank

Securitisation Regulation - ECB consults on draft Guide on securitisation transaction notification - 15 November 2021

The European Central Bank (ECB) has published for consultation a draft Guide (the Guide) for banks on the notification of securitisation transactions. The Guide sets out the notification practices that significant institutions (SIs) acting as originators or sponsors of securitisation transactions are advised to follow in order to provide the ECB with the information required to comply with the risk retention, transparency and resecuritisation requirements under Articles 6 to 8 of the Securitisation Regulation (2017/2402/EU).

The ECB recommends that SIs follow the Guide on all securitisation transactions originating after 1 April 2022. The Guide will be updated periodically to reflect developments in the regulation and supervision of securitisations.

The ECB highlights that the Guide is non-binding and instead serves as a basis for supervisory dialogue.

The ECB consultation closes on 5 January 2022.

ECB Guide on the notification of securitisation transactions: Articles 6 to 8 of the Securitisation Regulation


Press release

Bank of England

FPC O-SII buffer framework - Bank of England publishes Consultation Paper - 15 November 2021

The Bank of England (the Bank) has published a Consultation Paper on amendments to the Financial Policy Committee’s (FPC’s) framework for the other systemically important institutions (O-SII) buffer. Under the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014 (SI 2014/894), the FPC must have a framework for the O-SII buffer and review this framework at least every second year.

Following the FPC’s Q3 2021 review, the consultation proposes to:

  • change the metric used to determine the O-SII buffer rates from total assets to the UK leverage exposure measure; and
  • recalibrate the thresholds used to determine O-SII buffer rates to prevent an overall tightening or loosening of the framework relative to its pre-Covid-19 level.

If adopted, the changes would not take effect until after the PRA’s December 2022 review of O-SII buffer rates. Rates set in 2023 would apply from January 2025.

The consultation closes on 15 February 2022.

Consultation paper: Amendments to the FPC’s framework for the O-SII buffer

Prudential Regulation Authority

Domestic liquidity sub-groups - PRA publishes Policy Statement - 15 November 2021

The PRA has published a Policy Statement (PS26/21) on Domestic Liquidity Sub-Groups (DL sub-groups). PS26/21 provides feedback to responses to Consultation Paper CP19/21 on DL sub-groups and contains the PRA’s final policy. The purpose of the rules on DL sub-groups is to ensure that liquidity requirements are sufficiently prudent and proportionate when applied at the level of a DL sub-group.

PS26/21 is relevant to PRA-authorised banks, PRA-designated investment firms, and building societies. It is also relevant to UK financial or mixed financial holding companies that are immediate parent undertakings of firms that may be included in a DL sub-group. It is not relevant to credit unions.

When certain conditions are met, the Capital Requirements Regulation (CRR) allows the PRA to waive the application of liquidity requirements at the level of an individual firm to permit a firm to form a DL sub-group. Where a permission is granted, PRA requirements apply at the level of a DL sub-group on the basis of the consolidated situation of its members, rather than applying to member firms individually. HM Treasury will revoke this provision from 1 January 2022.

PS26/21 confirms that the PRA will implement its rules, as consulted on, to:

  • permit the inclusion in a DL sub-group of firms that are subsidiaries of a common intermediate UK qualifying parent undertaking that is not a bank or a PRA-designated investment firm (sibling DL sub-group); and
  • revise the conditions under which a firm would qualify for a DL sub-group permission and revise the factors that the PRA will take into account when considering DL sub-group permission applications.

In response to consultation feedback, the PRA has made several changes to the draft Statement of Policy published alongside CP5/21 (on the implementation of the Basel standards) to provide greater clarity on the PRA’s expectations in certain areas and enhance the proportionality of the PRA’s approach. These amendments clarify:

  • the information to be provided to demonstrate compliance with the conditions covering the governance arrangements of a DL sub-group; and
  • the circumstances in which a solo regulatory return for the Liquidity Coverage Ratio (LCR) and/or Net Stable Funding Ratio (NSFR) should be submitted with a DL sub-group.

The PRA expects firms to apply formally for LCR and NSFR DL sub-group permissions that are currently in force, or would enter into force, before 1 January 2022. All applications will be assessed under the final revised framework, with permissions taking effect from 1 January 2022.

A list of the PS26/21 appendices can be found on the webpage.

The policy changes will come into effect on 1 January 2022 to coincide with HM Treasury’s revocation of the relevant parts of the UK Capital Requirements Regulation.

Policy statement: Domestic Liquidity Sub-Groups (PS26/21)



CRR - PRA publishes webpage - 16 November 2021

The PRA has published a webpage containing a table listing revoked UK Capital Requirements Regulation provisions and their corresponding PRA rules, as it is required to do under the Financial Services Act 2021.

Under the Act, HM Treasury has the power to revoke existing prudential regulation contained in the UK CRR. The PRA is able to make rules that relate to these revoked matters and the standards developed by the Basel Committee on Banking Supervision (Basel Committee). The PRA is required to publish information detailing whether, and if so, how, its rules correspond to a UK CRR provision revoked by HM Treasury. This information is provided on the PRA’s webpage.

PRA Website: CRR rules corresponding to revoked onshore provisions

Financial Conduct Authority

Debt packagers - FCA publishes Consultation Paper - 17 November 2021

The FCA has published a Consultation Paper (CP21/30) containing proposals to prohibit debt packager referral fees to protect consumers. The proposals aim to reduce the risk that consumers receive non-compliant debt advice that is biased towards debt solutions which may not meet their needs, but would generate referral fees for the debt advice firm.

The prohibition follows the FCA’s concerns, set out in 2018 and 2020, on the quality of advice provided by debt packagers and its further concerns identified through recent supervision work that some debt packager firms:

  • appear to have manipulated consumers’ income and expenditure to meet the criteria for an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD);
  • used persuasive language to promote these products to consumers without fully explaining the risks involved; and
  • provided advice that did not accurately reflect conversations with consumers or information that consumers had given.

The FCA’s proposal is intended to remove the conflict of interest present in the debt packager business model and thereby reduce the risk of harm to consumers. If introduced, the FCA will monitor the impact on debt packagers, including the number that: (i) leave the market; and (ii) modify their business model.

The consultation closes on 22 December 2021. Subject to consultation feedback, the FCA indicates the new rules could come into force in April 2022.

FCA Consultation Paper: Debt packagers: proposals for new rules (CP21/30)


Press release

Payment Systems Regulator

APP scams - PSR publishes Consultation Paper - 18 November 2021

The Payment Systems Regulator (PSR) has published a Consultation Paper (CP21/10) setting out its plans to stop authorised push payment (APP) scams and protect people who fall victim to them. The Consultation Paper follows the PSR’s February 2021 call for views on the proposed measures (CP21/3), which have since been developed further.

The PSR proposes to:

  • require the 12 largest payment service providers (PSPs) in the 12 largest banking groups in Great Britain, and the two largest banks in Northern Ireland outside those banking groups, to publish data on: (i) their performance relating to APP scams; (ii) reimbursement levels for victims; and (iii) to which PSPs their fraud payments have been sent;
  • support and require industry to improve intelligence sharing; and
  • make reimbursement for scam victims mandatory, in line with future legislative changes as announced by HM Treasury.

The Consultation Paper also notes the value in voluntary action by PSPs to improve outcomes for customers. The PSR will facilitate the coordination of industry coming together to solve this issue and will work alongside other regulators to co-ordinate actions tackling APP fraud. It is also considering further measures, including how to appropriately balance liability between sending and receiving PSPs.

The consultation closes on 14 January 2022. The PSR aims to set out its policy position and accompanying action on this matter by H1 2022.

PSR Consultation Paper: Authorised push payment (APP) scams (CP21/10)


Press release

Competition and Markets Authority

SME Banking Undertakings - CMA publishes letter to Danske Bank - 12 November 2021

The Competition and Markets Authority (CMA) has published a letter to Danske Bank (a trading name of Northern Bank Limited) (DB) in relation to its breach of the Small and Medium-sized Enterprises Banking Undertakings 2002 (the SME Banking Undertakings), together with DB’s Action Plan to prevent further breaches.

The breach was in relation to the prohibition of bundling loans (where business account is made a condition of receiving a loan) under the SME Banking Undertakings. From 4 May 2020 to 31 March 2021, DB informed customers they needed to set up a business current account in order to apply for a bounceback loan bounce back loan under the government’s Bounceback Loan Scheme. This resulted in just over 200 SME customers opening business current accounts in order to receive such a loan. DB notified the CMA of the breach on 30 April 2021, following the CMA’s announcement on 30 March 2021 of an earlier breach by DB.

DB wrote to all affected customers offering refunds of business account charges and fees, and indicating that they could switch to a fee-free loan servicing account. DB paid out over £9,000 in compensation, bringing the compensation for both breaches to approximately £26,000. The CMA indicates that it worked with DB on the bank’s Action Plan, which includes measures such as staff training and an independent audit of its compliance controls and practices.

In view of the challenges presented by the COVID-19 pandemic, and the actions taken by DB to rectify the breach and prevent further breaches, the CMA has concluded that no formal enforcement action is required at present.

CMA Letter to Danske Bank: Breach of the SME Banking Undertakings

Danske Bank's Action Plan