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Financial Regulation Updates in Cyprus: EU Banks Show Resilience Amidst Signs of Credit Quality Deterioration
The European Banking Authority (EBA) has released its quarterly Risk Dashboard, which reveals that EU banks’ capitalization remains at record levels, with liquidity improving and return on equity standing at 10.3%. However, early signs of credit quality deterioration have become more apparent.
Resubmission of Historical Data Under the EBA Reporting Framework
The EBA has published its final guidelines on the resubmission of historical data under the EBA reporting framework. The guidelines provide a common approach to the resubmission of historical data by financial institutions in cases where errors, inaccuracies, or changes occur.
Establishment of Joint Oversight Team for Digital Operational Resilience Act
The European Supervisory Authorities (EBA, EIOPA and ESMA) have launched recruitments to establish a joint oversight team as part of the implementation of the Digital Operational Resilience Act (DORA). The team will consist of:
- A Director
- Legal experts
- ICT risk experts
Voluntary Dry Run Exercises for DORA Implementation
The European Supervisory Authorities have announced that they will launch voluntary dry run exercises in May to prepare the industry for the next stage of DORA implementation. This includes collecting registers of information on contractual arrangements with ICT third-party providers.
Annual Assessment of Banks’ Internal Approaches for Capital Requirements
The EBA has published its 2023 Reports on annual market and credit risk benchmarking exercises, which aim to monitor the consistency of risk-weighted assets across EU institutions authorized to use internal approaches for capital requirements. The report reveals:
- A relatively low dispersion in initial market valuations
- A decrease in value at risk submissions
Consultation on Technical Standards for Joint Examination Teams Under DORA
The European Supervisory Authorities have launched a public consultation on draft regulatory technical standards for the conduct of oversight activities by joint examination teams under DORA. The proposed standards aim to ensure maximum efficiency and effectiveness in the daily oversight of critical ICT third-party service providers.
Consultation on Draft Technical Standards for Long and Short Positions Under Derogations
The EBA has launched a public consultation on its draft regulatory technical standards on the specification of long and short positions under derogations for market and counterparty risks. The consultation runs until July 24, 2024.
Observations on High Earners in the EU
The EBA has published its report on high earners for 2022, which reveals an increase in the number of individuals working for EU banks and investment firms who have received a remuneration of more than EUR 1 million. This is linked to the overall good performance of institutions and salaries adjusted for inflation.
Publication of RTS on MiCARE
The EBA has published its final draft of regulatory technical standards (RTS) on complaints handling for asset reference tokens under the Markets in Crypto-Assets Regulation (MiCAR). The draft RTS sets out:
- Requirements
- Templates
- Procedures for handling complaints received by issuers of asset reference tokens
These updates reflect ongoing efforts to strengthen financial regulation in Cyprus and across the EU, ensuring stability and resilience in the banking sector.