Copy
If you can't see this email, click here

Legal News. European Banking Law. November

www.europeanbankinglaw.com

I. RULES, ACTS AND SOFT LAW OF THE EUROPEAN UNION

AMENDMENT TO THE ETHICS FRAMEWORK OF THE ECB (This text replaces Part 0 of the ECB Staff Rules as regard the ethics framework of the text published in the Official Journal C 204 of 20 June 2015, p. 3) (2020/C 375/02), OJUE 6.11.2020
You can find regulation on conflicts of interest;  gifts and hospitality; awards, honours and decorations; external activities; post-employment restrictions; professional secrecy; relations with external parties; private financial transactions, etc.
OPINION OF THE EUROPEAN CENTRAL BANK of 23 September 2020 on proposals for regulations amending the Union securitisation framework in response to the COVID-19 pandemic (CON/2020/22), OJUE 9.11.2020
In this Opinion it can be read expressions such us “the unprecedented implications of the global crisis triggered by the coronavirus (COVID-19) pandemic”.
Reading the opinion provokes some reflections on the system of sources, by citing on several occasions that european regulations are based on draft standards prepared by the Basel Committee on Banking Supervision, although in some cases it deviates from these standards.
ECB rejects some tasks. It considers that it is not a question of prudential supervision but of supervision of product markets.
The title of doubtful exposures and the possible transfer of the risk of bad exposures out of the banking system appears.
DECISION (EU) 2020/1688 OF THE EUROPEAN CENTRAL BANK of 25 September 2020 amending Decision (EU) 2020/187 on the implementation of the third covered bonds purchase programme (ECB/2020/48), OJEU 13.11.2020
Article 3, point (d) of paragraph 3, Decision (EU) 2020/187, is replaced by the following: “Covered bonds issued by credit institutions whose access to Eurosystem monetary policy operations has been limited, suspended or excluded pursuant to Guideline (EU) 2015/510 (ECB/2014/60) shall be automatically excluded from purchases under the CBPP3 for the duration of the limitation, suspension or exclusion. By derogation from the first sentence of this point (d), the Governing Council shall retain its power, following a case-by-case assessment, to reassess the exclusion of covered bonds issued by a credit institution whose access to Eurosystem monetary policy operations has been limited, suspended or excluded pursuant to Guideline (EU) 2015/510 (ECB/2014/60) and to revoke the exclusion, if deemed appropriate”
GUIDELINE (EU) 2020/1690 OF THE EUROPEAN CENTRAL BANK of 25 September 2020 amending Guideline (EU) 2015/510 on the implementation of the Eurosystem monetary policy framework (ECB/2020/45). OJUE 13.11.2020
Guideline “should be amended to incorporate necessary technical and editorial adjustments relating to certain aspects of monetary policy operations”.
“In order to reduce the overall complexity of the Eurosystem’s collateral framework, the Eurosystem risk exposure and the operational burden on the eligibility assessment, non-legislative covered bonds (i.e. contractual covered bonds) should no longer be accepted as Eurosystem collateral”.
“To further reduce the complexity of the Eurosystem’s collateral framework, and taking into account the limited extent to which they have been used, marketable debt instruments issued or guaranteed by non-financial corporations for which no appropriate credit assessment is available should no longer be accepted as Eurosystem collateral after a transition period”.
“With a view to reflecting recent financial innovations in the area of sustainable finance, the Eurosystem intends to accept certain marketable debt instruments with coupon structures linked to the issuer’s fulfilment of pre-defined sustainability targets”.
“In order to establish a consistent and transparent approach to the categories of secured marketable assets eligible as collateral for Eurosystem credit operations, secured marketable assets other than ABSs and covered bonds should no longer be accepted as Eurosystem collateral”.
“To ensure greater transparency, consistency and legal certainty, the general acceptance criteria for external credit assessment institutions (ECAIs) in the Eurosystem credit assessment framework (ECAF) should be clarified”.
“The financial penalty for breaches related to the use of eligible assets as Eurosystem collateral should be adjusted to provide incentives to counterparties to proactively report such breaches”.
GUIDELINE (EU) 2020/1690 OF THE EUROPEAN CENTRAL BANK of 25 September 2020 amending Guideline (EU) 2015/510 on the implementation of the Eurosystem monetary policy framework (ECB/2020/45). OJUE 13.11.2020
GUIDELINE (EU) 2020/1691 OF THE EUROPEAN CENTRAL BANK of 25 September 2020 amending Guideline ECB/2014/31 on additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral (ECB/2020/47), OJUE 13.11.2020
“Asset-backed securities whose underlying assets include residential mortgages or loans to small and medium-sized enterprises, or both, and which do not fulfil certain requirements specified in Article 3(5) of Guideline ECB/2014/31 should no longer be eligible as Eurosystem collateral, in view of the fact that this asset class has never been used”.
“The method of calculation of financial penalties in cases where credit claims that are not compliant with Article 154(1)(c) of Guideline (EU) 2015/510 of the European Central Bank”.
GUIDELINE (EU) 2020/1692 OF THE EUROPEAN CENTRAL BANK of 25 September 2020 amending Guideline (EU) 2016/65 on the valuation haircuts applied in the implementation of the Eurosystem monetary policy framework (ECB/2020/46), OJUE 13.11.2020
“Adjustments need to be made to the Eurosystem risk control and valuation framework to reflect the fact that nonlegislative covered bonds (i.e. contractual covered bonds) should no longer be accepted as Eurosystem colateral”.
DECISION (EU) 2020/1735 OF THE EUROPEAN CENTRAL BANK of 12 November 2020 amending Decision (EU) 2016/2248 on the allocation of monetary income of the national central banks of Member States whose currency is the euro (ECB/2020/55). OJEU 20.11.2020
DECISION (EU) 2020/1736 OF THE EUROPEAN CENTRAL BANK of 12 November 2020 amending Decision (EU) 2015/298 on the interim distribution of the income of the European Central Bank (ECB/2020/56). OJEU 20.11.2020
Provision needs to be made for the interim distribution of the European Central Bank’s income from the PEPP (temporary pandemic emergency purchase programme PEPP).

II. COURT DECISIONS / JUDGEMENT

Judgements of the General Court . Single Resolution Mechanism for credit institutions and certain investment firms (SRM) — Single Resolution Fund (SRF) — Decision of the SRB on the calculation of the 2017 ex ante contributions Decision of the SRB on the calculation of the 2017 ex ante contributions
Judgment of the General Court of 23 September 2020 — Landesbank Baden-Württemberg v SRB (Case T-411/17). JOUE 16.11.2020
Judgment of the General Court of 23 September 2020 — Hypo Vorarlberg Bank v SRB (Case T-414/17). JOUE 16.11.2020
Judgment of the General Court of 23 September 2020 — Portigon v SRB (Case T-420/17), JOUE 16.11.2020
Prudential supervision of credit institutions — Contribution to the deposit guarantee system or to the single resolution fund by means of irrevocable payment commitments — Tasks entrusted to the ECB. Measure requiring the deduction of the cumulative amount of irrevocable payment commitments outstanding from Tier 1 capital — Absence of individual examination.
Judgements of the General Court of 9 septembre 2020. Cases T-144/18, T-145/18, T-149/18. OJEU 23.11.2020
Civil service — ECB staff — Career transition support — Eligibility — Legal certainty — Equal treatment — Legitimate expectations — Duty of care — Discrimination on grounds of sex — Proportionality — Liability
Judgements of the General Court of 23 septembre 2020. Case T-433/18. OJEU 23.11.2020
Decision ordering that information be provided to the competent authority of a Member State, acting in response to a request for exchange of information from the competent authority of another Member State. Combating international tax fraud and tax evasion.
Judgment of the Court (Grand Chamber) of 6 October 2020 (requests for a preliminary ruling from the Cour administrative — Luxembourg) — État luxembourgeois v B (C-245/19), and État luxembourgeois v B, C, D and F.C. (C-246/19) (Joined Cases C-245/19 and C-246/19). OJEU 30.11.2020

III. OTHER READINGS

RECOMMENDATION OF THE EUROPEAN SYSTEMIC RISK BOARD of 24 September 2020 on identifying legal entities (ESRB/2020/12). OJEU 26.11.2020
Remember this recommendation that the “global economy is based on an intricate, tightly knit and extremely complex network of financial transactions that are created by a vast number of cross-border contracts with effects reaching across the world. This network comprises not only financial institutions, but any entities that have relationships with each other and with the financial markets”.
A reference to financial contagions can be read. He says that “the availability and wide adoption of a worldwide unique identifier to unequivocally identify entities engaged in financial transactions is of key importance”.
Two recommendations are made. A) “Introduction of a Union framework on the use of the legal entity identifier” . B) “use of the legal entity identifier until the possible introduction of Union legislation”.
By 30 June 2023, the Commission is requested to deliver to the European Parliament, to the Council and to the ESRB a report on the implementation of Recommendation A.
By 31 December 2021, the addressees of Recommendation B are requested to deliver to the European Parliament, to the Council, to the Commission and to the ESRB a report on the implementation of Recommendation B.
European Court of Auditors. Special Report No 25/2020 ‘Capital Markets Union – Slow start towards an ambitious goal’.
European Parliament resolution of 16 January 2019 on Banking Union — annual report 2018 (2018/2100(INI)), OJEU 27.11.2020
The publication of certain European Parliament resolutions so late is curious.
The European Parliament considers that “the role of the EBA needs to be significantly strengthened in order to effectively implement and monitor anti-money laundering measures”. I can remember the ECB had rejected such powers and competences.
 
The European Parliament considers “that one of the aims of the Banking Union, besides ensuring financial stability, should among others be, keeping in mind the proportionality principle, to preserve the diversity of EU sustainable banking models and to avoid guiding the European banking system towards a single model or disproportionally penalising smaller banks, as this diversity enables the requirements of citizens and of their projects to be met, as well as acting as a diversification tool, a key feature to cope with potential shocks”.
“Stresses that the Basel Committee on Banking Supervision (BCBS) standards in particular should not be enacted wholesale into European law without taking proper account of the specific characteristics of the European banking system and of the proportionality principle”.
European Parliament resolution of 16 January 2019 on the ECB Annual Report 2017 (2018/2101(INI)). OJEU 27.11.2020
The reader can read literally:
 
“whereas the euro area banks have accelerated their reduction in the number of non-performing loans (NPLs), from 8 % of total loans in 2014 to 4,9 % in the fourth quarter of 2017; whereas the total volume of NPLs across the EU is still at the level of EUR 950 billion; whereas NPLs need to be either sold, (partially) written off or appropriately provisioned for in order to ensure financial stability and avoid negative consequences for current account holders, savers and investors; whereas there are significant differences between Member States in the numbers of NPLs; whereas NPL ratios in eight Member States are still well above 10 % and two of these have a ratio of over 40 %”.
 
“Notes that of all private sector purchase programmes, the corporate sector programme (CSPP) contributed the most to the APP in 2017, with EUR 82 billion in net purchases; welcomes the fact that since 2017 the ECB has been publishing the full list of all CSPP holdings, including the names of issuers, together with aggregated data on those holdings by country, risk, rating and sector; calls on the ECB to apply a similar transparency policy for all asset purchase programmes, including ABSPP and CBPP3, in addition to further measures, in order to disclose the operational procedures used in the choice of securities purchased by national central banks (NCBs); stresses that the CSPP must by no means lead to competitive distortions within the internal market”.
 
“Stresses the importance of the ECB being accountable to Parliament; welcomes, in this respect, the permanent dialogue between the ECB and Parliament, and the regular appearances of the President of the ECB and, where applicable, other members of the Executive Board, before the Committee on Economic and Monetary Affairs and the plenary; encourages the ECB to continue this dialogue; stresses that the ECB has improved its communication; believes that it should continue its efforts to make its decisions available and understandable to all citizens, as well as its actions to maintain price stability in the euro area and therefore preserve the purchasing power of the common currency; 51. Congratulates the ECB on the efforts it has made thus far to improve transparency and democratic accountability vis-à-vis European citizens and the European Parliament”.
European Parliament resolution of 17 January 2019 on the Annual Report on the financial activities of the European Investment Bank (2018/2161(INI)). OJEU 27.11.2020
“Notes that the EIB is annually audited by the European Court of Auditors; notes the debate on the possibility of introducing supervision of its lending operations by the ECB; warns that this could have a major impact on the nature, functioning and governance of the EIB”.
“Given the key role of SMEs, believes that the EIB’s SME strategy should include the reinforcement of its administrative and advisory capacities for providing information and technical support to SMEs as regards development and applying for finance”.
European Parliament resolution of 17 January 2019 on the Annual Report on the control of the financial activities of the EIB for 2017 (2018/2151(INI)). OJEU 27.11.2020
The reader can read European Parliament reiterates “its concern that half of the Member States received 80 % of the total EIB investment inside the EU while the other 14 Member States received only 10 % of this investment; reiterates additionally that three Member States individually received 16 %, 15 % and 11 % respectively; asks the Bank to include in its reporting breakdown information about its investment in low income and high income regions according to its own Investment Survey (EIBIS) and with regard to the potential effect for overcoming investment gaps and barriers in less favourable regions in the EU”.
 
Welcomes “the EIB’s role in issuing climate awareness bonds (or EUR 4,29 billion compared to EUR 3,8 billion in 2016)”.
Reiterates “its demand concerning the EIB annual report and requests the EIB to present a more comprehensive, detailed and harmonised annual activity report and significantly improve the presentation of the information by including detailed and trustworthy breakdowns of the investments approved, signed and disbursed for the given year and the financing sources engaged (own resources, EFSI, EU centrally managed programmes, etc.), as well as such information regarding beneficiaries (Member States, public or private sector, intermediaries or direct recipients), sectors supported, and the results of the ex post evaluations”.
“Encourages a better synergy between EFSI and national promotional banks as the coordination with NPBs is a recurrent effort that could contribute to the EFSI’s effectiveness”.
European Banking Public Law

Juan Antonio Ureña Salcedo
Jean Monnet Chair Universitat de València

The European Commission support for the production of this publication does not constitute an endorsement of the contents which reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
Copyright © 2020, European Banking Public Law. All rights reserved.

Nuestra dirección de contacto es:
info@europeanbankinglaw.com

¿Quieres darte de baja?
Puedes darte de baja aquí