Communications - Communication of 8 September 2020

1
Communication of 8 September 2020. Guidelines of the European Banking Authority regarding reporting and public disclosure obligations concerning the provisions contained in Regulation 873/2020 (so-called CRR Quick-fix).

1. Premise
   With this communication, the Bank of Italy implements the Guidelines of the European Banking Authority (EBA) that provide clarifications and instructions on the completion of supervisory reporting templates and public disclosures (EBA/GL/2020/11 and EBA/GL/2020/12) in light of the changes to regulatory requirements introduced by EU Regulation No. 873/2020 in the context of the COVID-19 pandemic (so-called CRR Quick-fix). In particular, the following secondary acts issued by the EBA are transposed:
2. Guidelines on supervisory reporting and disclosure requirements in compliance with CRR “Quick fix” in response to the COVID-19 pandemic (EBA/GL/2020/11);
3. Guidelines on uniform disclosures under Article 473a of Regulation (EU) No 575/2013 (CRR) on the transitional period for mitigating the impact of the introduction of IFRS 9 on own funds to ensure compliance with the CRR “quick fix” for the COVID-19 pandemic (EBA/GL/2020/12).
4. Content
   The Guidelines on reporting and public disclosure requirements, referred to in point 1, provide instructions on the reporting treatment to be adopted in relation to the following regulatory changes introduced by the CRR Quick-fix:
   a) for the purpose of calculating the leverage ratio: i) the temporary exclusion of exposures to central banks from the calculation of an institution's total exposure measure (Article 500 ter CRR); ii) the early entry into force, compared to what is provided by CRR2, of the regulatory treatment for purchases and sales of “standardized contracts” (so-called “regular-way”) pending settlement (Article 500 quinquies CRR); b) for the purpose of calculating capital requirements against credit risk, the more favorable prudential treatment provided for SMEs, for infrastructure exposures, and for loans to pensioners and employees (with permanent contracts) guaranteed by the borrower's pension or salary (Articles 123, 501, and 501 bis CRR); c) for reporting related to own funds: i) the introduction of a temporary prudential filter for unrealized profits and losses on financial assets measured at fair value with impact on overall profitability towards counterparties referred to in Articles 115, paragraph 2, and 116, paragraph 4 of the CRR (Article 468 CRR); ii) the changes to transitional provisions for mitigating the impact of IFRS 9 on CET1, which provide, inter alia, an increase in the percentage of expected losses to be reinstated in own funds and a two-year extension of the transitional period (Article 473 bis CRR). These Guidelines also provide, in relation to the exercise of the exclusion referred to in letter a), the integration of public disclosure with a specific disclosure on the amount of exposures to central banks subject to exclusion and their relative effect on the leverage ratio. The Guidelines on public disclosure, referred to in point 2, modify EBA/GL/2018/01 to take into account the impacts on own funds of the changes referred to in letter c). The main changes concern: i) the extension of the period for required disclosure due to the extension of provisions on the transitional regime for IFRS 9 and the introduction of additional qualitative information requirements aimed at understanding decisions made within the framework of the discretions provided for in Article 473 bis CRR, as amended by the CRR Quick-fix; ii) the introduction of new information requirements related to the transitional prudential treatment provided

2 for unrealized profits and losses on exposures to certain counterparties measured at fair value with impact on overall profitability.

Given the context of necessity and urgency and the limited nature of the changes, the Bank of Italy (as well as the EBA, which has only notified the Banking Stakeholder Group of its intention to issue these Guidelines) did not conduct a public consultation, nor a regulatory impact analysis (1).
This communication has the nature of a binding general measure for banks and less significant banking groups and enters into force on the day of publication on the Bank of Italy's website.
With reference to the Guidelines on public disclosure, the provisions will be transposed into Circular 285 “Supervisory provisions for banks” at the first available opportunity.
1 See Article 8, paragraph 1, of the Measure of 9 July 2019 “Regulation governing the adoption of acts of a normative or general content by the Bank of Italy in the exercise of supervisory functions, pursuant to Article 23 of Law No. 262 of 28 December 2005”.