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The European Banking Authority up and running and preparing new EU-wide stress test

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The EBA elected its decision-making bodies

The European Banking Authority (EBA) officially came into being on 1 January 2011, taking over all existing and ongoing tasks and responsibilities from the Committee of European Banking Supervisors (CEBS). The EBA yesterday convened its first Board of Supervisors meeting.

At its inaugural gathering on 12 January 2011, the Board of Supervisors, as the main EBA decision-making organ, elected the EBA Chairperson, the EBA Alternate Chairperson and the members of the EBA Management Board.

The EBA Board of Supervisors selected Andrea Enria as the EBA Chairperson, subject to confirmation by the European Parliament. Mr Enria, who is currently the head of the Supervisory Regulations and Policies Department at the Bank of Italy, was chosen from a shortlist of candidates drawn up by the European Commission. The Chairperson represents the EBA, is responsible for preparing the work of the Board of Supervisors and chairs the meetings of the Board of Supervisors and the Management Board.

The EBA Board of Supervisors also appointed Thomas Huertas as the EBA Alternate Chairperson. Thomas Huertas, formerly Vice-Chairman of CEBS and currently Banking Sector Director at the UK FSA, will carry out the functions of the Chairperson in his absence and until the Chairperson has officially taken up his duties.

The EBA Board of Supervisors elected six representatives from the national supervisory Authorities to serve as members of the EBA Management Board. The six elected members are: Martin Andersson, Finansinspektionen, Sweden; Sabine Lautenschlager, BaFin, Germany; Danièle Nouy, Autorité de Contrôle Prudentiel, France; David Rozumek, Ceska Narodni Banka, Czech Republic; Karoly Szasz, Pénzügyi Szervezetek Állami Felügyelete, Hungary; Jukka Vesala, Finanssivalvonta, Finland. Jonathan Faull, from the European Commission, will also participate in meetings of the Management Board. The role of the Management Board is to ensure that the EBA carries out its mission and performs its tasks in accordance with its Regulation.

Finally, the selection procedure of the EBA Executive Director is still underway. “All the work we did in building CEBS has now come to fruition in the establishment of the EBA and the EBA staff are committed to taking forward the new challenging mandate”, said Arnoud Vossen, Acting Secretary General of the EBA and in charge of the EBA day-to-day management until the EBA Executive Director is officially appointed.

The EBA announced a new round of stress tests

The EBA Board of Supervisors agreed yesterday on a strategic work plan for an EU-wide stress test to take place in the first half of 2011 and to publish results in mid-2011.

The 2011 stress test will be carried out in cooperation with the national supervisory authorities, the European Systemic Risk Board (ESRB), the European Central Bank (ECB) and the European Commission, and will cover a broadly similar group of banks as last year.

The methodology and approach taken will build on that used in the 2010 stress test.  The results will be subject to a stringent review and quality control process.

The objective of the stress test is to assess the resilience of the EU banking system to hypothetical stress events under certain restrictive conditions. The stress test is one of a range of supervisory tools for assessing the strength of individual institutions as well as the overall resilience of the system.

This stress test is a part of the framework for the assessment of the resilience of the financial sector being built by the European System of Financial Supervision (ESFS) and will be carried out in parallel with stress tests undertaken by the European Insurance and Occupational Pensions Authority (EIOPA).

The EBA announced future assessment of liquidity risk

The EBA will, as part of its regular cycle of risk assessments, initiate a separate thematic review of liquidity funding risks across the EU banking sector in the first quarter of 2011. The EBA will use this internal review to inform supervisory authorities about areas of vulnerability in relation to liquidity risk.

About EBA

The European Banking Authority is an independent EU Authority established on 1 January 2011 by Regulation (EC) No. 1093/2010 of the European Parliament and of the Council of 24 November 2010, and published in the Official Journal of the European Union (L 331/12) on 15 December, 2010.

With a view to improving the functioning of the EU internal market, the EBA will contribute to ensuring a high quality, effective and consistent level of regulation and supervision in its areas of competence. It will also promote public values such as the stability of the financial system, the transparency of markets and financial products, and the protection of depositors and investors.

It will work to prevent regulatory arbitrage and guarantee a level playing field, strengthen international supervisory coordination, promote supervisory convergence and will provide advice to the Union institutions in the areas of banking, payments and e-money regulation and supervision, and related corporate governance, auditing and financial reporting issues.

As an integral part of the ESFS, the EBA will work closely together with her sister authorities, EIOPA and ESMA, as well as the Joint Committee and the ESRB.

Website: www.eba.europa.eu



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