Application period for reducing bank own funds and liabilities shortened
The European Banking Authority (EBA) has published a final draft of regulatory technical standards (RTS) to shorten the application period for reducing own funds and eligible liabilities from four to three months. This change reflects the view that competent and resolution authorities can now process applications more quickly.
Application period shortened to three months
The European Banking Authority (EBA) has published final draft Regulatory Technical Standards (RTS) to shorten the application period for prior permission to reduce own funds and eligible liabilities from four to three months.
This decision follows the EBA's commitment to monitor the practical implementation of the initial extension, which was introduced to cater for more complex assessments by competent and resolution authorities.
After reviewing authorities' practices and considering feedback from institutions, the EBA concluded that the relevant authorities are now able to process these applications within a shorter timeframe, making the reversion to a three-month period reasonable and justified.
This change aims to provide more flexibility to institutions in their capital planning while maintaining supervisory prudence.
Simplified rules for liquidation entities removed
The final draft RTS proposes to remove simplified requirements for liquidation entities from Commission Delegated Regulation (EU) No 241/2014.
This amendment is a direct result of Directive (EU) 2024/1174, which rendered the simplified procedure void.
The Directive exempts liquidation entities, for which the resolution authority has not determined the MREL, from needing prior permission for actions such as repurchasing eligible liabilities.
This ensures consistency with the updated legislative framework and aligns with a proportionate approach for these entities.
Enhanced flexibility, maintained prudence
This procedural adjustment offers financial institutions greater flexibility in their capital planning and redemption requests.
It signals the EBA's responsiveness to practical implementation feedback and the evolving capabilities of supervisory authorities.
While seemingly technical, such streamlined processes can reduce operational burdens and enhance the efficiency of the regulatory framework.