Amending Guidelines for the identification of global systemically important institutions

EBA/GL/2022/12
29/09/2022
Amending Guidelines EBA/GL/2020/14 on the specification and disclosure of systemic importance indicators

GUIDELINES AMENDING GUIDELINES EBA/GL/2020/14
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Contents

1. Executive Summary 3
2. Background and rationale 4
3. Guidelines amending Guidelines EBA/GL/2020/14 6

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1. Executive Summary
1. According to the EBA’s Guidelines on the specification and disclosure of systemic im￾portance indicators (EBA/GL/2020/14- ‘the Guidelines’) the EBA - with the assistance of
relevant authorities - collects the information needed to identify global systemically im￾portant institutions (G‐SIIs) in the EU. The EBA discloses the main indicators and the un￾derlying data used in the identification and scoring process, but not ancillary data and mem￾orandum items. Institutions qualifying as G-SIIs are also required to disclose the main indi￾cators, but not ancillary data and memorandum items. Similarly, Article 6a of the Imple￾menting Technical Standards (‘the ITS’) on the disclosure of systemic importance indicators by those institutions ultimately qualifying as G-SIIs (Commission Implementing Regulation (EU) 2021/637) requires G-SIIs to disclose the indicators, but not ancillary data and memo￾randum items collected.
2. Pursuant to paragraph 2a of Directive (EU) 2019/878 of 20 May 2019 and to article 5a of
Delegated Regulation (EU) 2021/539 of 11 February 2021, an additional overall G-SII score that accounts for the specificities of the European Banking Union (EBU) and the Single Res￾olution Mechanism (SRM) within cross-border activity indicators should be computed. The additional identification methodology in the EU then supported the BCBS-level debate on how to best recognise the EU integration process and progress in the G-SIB framework.
3. Following the 2022 recognition of the EBU in the G-SIB framework and the end-2021 G-SII
disclosure exercise, it is necessary to amend the existing EBA Guidelines. With this amend￾ment, the EBA provides a harmonised understanding for the EU context of the term ‘ancil￾lary or memorandum items’ referred to in both the ITS and the Guidelines. It is being clari￾fied that the items relating to the recognition of the EBU (while formally part of the ‘mem￾orandum items’ under the Basel framework) now constitute a core part of the classification of G-SIIs in the Union and therefore should be disclosed.
4. This additional disclosure will increase the transparency in the G-SIIs identification process,
without creating an additional burden for reporting agents. It will also provide the neces￾sary transparency in line with Basel recognition of cross-border exposures within the EBU. It will also help ensure a level playing field by providing the information needed for the calculation of GSIIs scores.
5. Given the limited extent of the changes which do not impact the overall approach estab￾lished in the Guidelines and very limited additional burden on affected institutions, it is
disproportionate to carry out a public consultation. The EBA’s Banking Stakeholder Group (BSG) has been consulted instead and has not opposed this amendment.

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2. Background and rationale
6. The EBA methodology to identify global systemically important institutions (G-SIIs) follows
the approach of the Basel Committee on Banking Supervision (BCBS) for identifying global systemically important banks (G-SIBs, in BCBS terminology). Following the update of the methodology that the BCBS published in 2018, the EBA issued in 2020 the revised Regula￾tory technical standards (‘the RTS’) on the methodology for identifying G‐SIIs (Delegated Regulation (EU) 1222/2014); in 2021 the Implementing Technical Standards (‘the ITS’) on the disclosure of systemic importance indicators by those institutions ultimately qualifying as G-SIIs (Commission Implementing Regulation (EU) 2021/637); and in 2020 Guidelines on the specification and disclosure of systemic importance indicators (EBA/GL/2020/14- ‘the Guidelines’), which relates to the ‘ex ante’ disclosures by the wider circle of EBU-headquar￾tered G-SIBs.
7. The EBA Guidelines increase the transparency in the G-SIIs identification process and en￾sure a continued level playing field with respect to disclosure requirements between global
systemically important institutions (G-SIIs) and other large institutions with an overall lev￾erage ratio exposure measure of more than EUR 200 billion at the end of each year. Ac￾cording to the Guidelines as amended in 2020, the EBA collects and discloses on its website information provided by the relevant authorities for the identification of G‐SIIs, with the exception of ancillary data and memorandum items. Similarly, Article 6a of Commission Implementing Regulation (EU) 2021/637 as amended by Commission Implementing Regu￾lation (EU) 2022/631 of 13 April 2022, requires G-SIIs to disclose the indicators, with the exception of any ancillary data and memorandum items collected.
8. With paragraph 2a of Directive 2013/36/EU issued in 2019, the need for an additional iden￾tification methodology of G-SIIs in the EU has emerged. Subsequently, this additional iden￾tification methodology applicable in the EU has been detailed in the Delegated Regulation
2021/539/EU where the additional overall G-SII score is requested to account for the spec￾ificities of the European Banking Union (EBU) and the Single Resolution Mechanism (SRM) within cross-border activity indicators. In turn, this additional identification methodology in the EU supported the open debate at the BCBS level on how to recognise the EU integra￾tion process and progress in the G-SIB framework.
9. The BCBS has now completed its targeted review of the treatment of cross-border expo￾sures within the European Banking Union (EBU) on the methodology for G-SIBs. The Com￾mittee recognised
1 the progress that has been made in the development of the European 1 See https://www.bis.org/press/p220531.htm

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Banking Union. The BCBS agreed to recognise this progress through the existing methodol￾ogy G-SIB framework, which allows for adjustments to be made according to supervisory judgement.
10. Under the agreement, a parallel set of G-SIB scores will need to be calculated for EBU￾headquartered G-SIBs and used to adjust their subcategory allocations, where applicable
and deemed appropriate. The parallel scores recognize 66% of the score reduction that would result from treating intra-EBU exposures as domestic exposures under the G-SIB scoring methodology. 2 In turn, the agreement foresees a detailed description by EU Au￾thorities of the methodology and requirements for relevant EBU-headquartered banks to disclose the underlying data for adjusted cross-jurisdictional indicators which are needed to calculate the parallel set of scores. As a result, disclosure of all this data reinforces the credibility and commitment of the EU to fulfil the agreement and provides transparent in￾formation on any future supervisory judgement decision taken on the basis of the men￾tioned parallel scores.
11. Following the 2022 recognition of the EBU in the G-SIB framework and as result of the end￾2021 G-SII disclosure exercise, obviously the items relating to the recognition of the EBU,
while part of the ‘memorandum items’ under the Basel framework, cannot be considered as ‘ancillary or memorandum’ within the EBU context but they instead constitute a core
part of the classification of G-SIIs in the Union and are therefore necessary to be disclosed.
. As a result, it is necessary for the EBA to provide a harmonised understanding in the EU of the term ‘ancillary or memorandum items’, referred to in both the ITS and the Guidelines, in light of the latest Basel international agreement which the EBA is obliged to take into account pursuant to Article 131(18) of Regulation (EU) No 575/2013. Therefore, it is neces￾sary to add a provision in the Guidelines stating that these specific data items are not con￾sidered as ancillary or memorandum for the purpose of identification and subcategory al￾location of G-SIIs in the Union.
12. These additional data items to be disclosed are already being collected by institutions, and
in addition submitted thereafter to the EBA, as part of the memorandum items of the G-SII disclosure exercise, hence do not create any additional burden on institutions or authorities (for 2022, on the basis of the end-2021 G-SII disclosure exercise). As a result, their disclo￾sure will further increase the transparency in the G-SIIs identification process, without cre￾ating additional burden for the reporting agents.
13. Given the limited extent of the changes and the limited impact on the affected institutions,
it was deemed disproportionate to carry out a public consultation. The EBA’s Banking Stake￾holder Group (BSG) has been consulted instead and has not opposed this amendment. 2 The Committee's agreement will not affect the classification of any banks as G-SIBs or the scores or subcategory allocations of banks outside of the EBU (https://www.bis.org/press/p220531.htm).

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3. Guidelines

GUIDELINES AMENDING GUIDELINES EBA/GL/2020/14
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EBA/GL/2022/12
29/09/2022
Guidelines amending Guidelines
EBA/GL/2020/14 on the specification and disclosure of systemic-importance indicators

GUIDELINES AMENDING GUIDELINES EBA/GL/2020/14
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1. Compliance and reporting
obligations
Status of these guidelines
1. This document contains guidelines issued pursuant to Article 16 of Regulation (EU) No
1093/2010 3
. In accordance with Article 16(3) of Regulation (EU) No 1093/2010, competent authorities and financial institutions must make every effort to comply with the guidelines.
2. Guidelines set the EBA view of appropriate supervisory practices within the European System
of Financial Supervision or of how Union law should be applied in a particular area. Competent authorities as defined in Article 4(2) of Regulation (EU) No 1093/2010 to whom guidelines apply should comply by incorporating them into their practices as appropriate (e.g. by amending their legal framework or their supervisory processes), including where guidelines are directed primarily at institutions. Reporting requirements
3. According to Article 16(3) of Regulation (EU) No 1093/2010, competent authorities must notify
the EBA as to whether they comply or intend to comply with these guidelines, or otherwise with reasons for non-compliance, by 16.01.2023. In the absence of any notification by this deadline, competent authorities will be considered by the EBA to be non-compliant. Notifications should be sent by submitting the form available on the EBA website with the reference ‘EBA/GL/2022/12’. Notifications should be submitted by persons with appropriate authority to report compliance on behalf of their competent authorities. Any change in the status of compliance must also be reported to EBA.
4. Notifications will be published on the EBA website, in line with Article 16(3).
2. Addressees
5. These guidelines are addressed to competent authorities as defined in point (i) of Article 4(2)
of Regulation (EU) No 1093/2010 and to financial institutions in relation to which these Guidelines apply. Designated authorities referred to in Article 131(1) of Directive 2013/36/EU 3 Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC, (OJ L 331, 15.12.2010, p.12).

GUIDELINES AMENDING GUIDELINES EBA/GL/2020/14
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3. Implementation
Date of application
6. These guidelines apply from dd.mm.yyyy
4. Amending guidelines
7. EBA/GL/2020/14 is amended as follows:
(a) The following paragraph 10a is added to Section 4:
“Pursuant to Article 131(2a) of Directive 2013/36/EU requiring an additional identification methodology that excludes cross-border activities within the Single Resolution Mechanism, and in accordance with the international agreement by the Basel Committee of 31 May 2022 to acknowledge the progress made in the development of the European Banking Union, data items relevant for the calculation of adjusted cross-jurisdictional indicators concerning institutions headquartered in Member States adhering to the Single Resolution Mechanism should be considered as part of the cross-jurisdictional activity indicators and not as ancillary or memorandum items for the G-SII identification and subcategory allocation methodology.”