Publication alert: BdE - Proyecto de Circular que modifica las Circulares sobre supervisión y solvencia y la Circular sobre transparencia y responsabilidad en la concesión de préstamos
We communicate that the Bank of Spain (BoS) has launched the public consultation on the Proyecto de circular que modifica las Circulares 2/2016 y 2/2014, sobre supervisión y solvencia y ejercicio de opciones regulatorias, y la Circular 5/2012, sobre transparencia y responsabilidad en la concesión de préstamos.
1. Context
In 2012 the BdE published Circular 5/2012 on transparency of banking services and responsibility in the granting of loans. Subsequently, in 2014 it published Circular 2/2014 on the exercise of various regulatory options contained in the Capital Requirements Regulation (CRR). In addition, in 2016 it published Circular 2/2016 on supervision and solvency, which completes the adaptation of the Spanish legal system to the Capital Requirements Directive (CRD) and the CRR Regulation.
In this context, the BdE has launched the Public Hearing on the Draft Circular amending Circulars 2/2016 and 2/2014, on supervision and solvency and the exercise of regulatory options, and Circular 5/2012, on transparency and responsibility in the granting of loans, with the aim of completing the transposition of CRD V, as well as exercising the options and national discretions of CRR II and developing information obligations in revolving credits.
2. Main points
Amendment of Circular 2/2016, to credit institutions, on supervision and solvency. The draft introduces relevant amendments in the following areas:
- Capital buffers for global systemically important institutions and buffer against systemic risks. It introduces capital requirements that cannot be covered by the capital intended to meet the combined capital buffer requirement. In addition, the classification of sub-categories based on the BCBS methodology on systemic importance is maintained. This classification reflects the buffer percentages to be applied to the amount of risk exposure. It has been retained rather than eliminated as in CRD V, in order to provide clarity and certainty by giving legal certainty to the process of setting the buffer rates. Finally, the minimum systemic risk buffer level of 1% is eliminated and the possibility of assigning a buffer rate only to subsets of exposures is introduced.
- Internal organization. Three new rules have been introduced to establish the additional procedure for documentation, disclosure and reporting of loans to directors and related parties, which coexists with the current authorization regime contained in the Circular.
- Capital self-assessment and the supervisory review process. The assessment of systemic risk has been eliminated, as it is not appropriate for the microprudential supervisor to assess this risk, nor to take it into account when quantifying the additional own funds requirement.
- Risk treatment. The rule that dealt with developing the obligation for institutions to have systems in place to identify, assess and manage interest rate risk has been removed, as the content of the rule is contained in higher-ranking rules (Law 10/2014, on the regulation, supervision and solvency of credit institutions).
Amendment of Circular 2/2014, on prudential requirements for credit institutions and investment firms. Aspects of the exercise of options and national discretions (OND) are modified. The updates are only carried out in order to reorganise the legislation and to include all the amendments to CRR II in the same Circular. These updates are as follows:
- Removes two rules, one relating to exposures in relation to counterparty risk hedging and the other on liquidity outflows in products related to trade finance off-balance sheet items, providing more flexibility for institutions.
- It includes five standards to exercise four new OND included in CRR II. The rules deal with the default status of the obligor; the calculation of the amount of stable funding required; the residual maturity of an asset; level 2B assets and significant equity indices; and finally exemptions for large exposures.
- On transitional regulatory options, the amendment removes certain rules or sections that have become obsolete because their term has expired.
Amendment of Circular 5/2012, for credit institutions and payment service providers, on transparency of banking services and responsibility in the granting of loans. The aim of the amendment is to develop certain information transparency obligations applicable to revolving credit, in the pre-contractual and post-contractual phase. Among the amendments, the pre-contractual information provided to the customer on consumer credit is extended; and the regulatory references on contractual and post-contractual information are updated.
3. Next Steps
Comments to this public hearing can be submitted until 9 December 2021.