EUROPEAN UNION: EBA Assesses Regulatory Equivalence of Third Countries

Wednesday June 3 2015

The European Banking Authority (EBA) has published a questionnaire to guide its assessment of non-EU countries` equivalence with the EU prudential supervision and regulatory requirements specified in the Capital Requirements Regulation (CRR) and Directive (CRD). The questionnaire, which will be sent to a selected number of countries in different rounds, will facilitate the collection of data and allow the EBA to provide technical advice on the supervisory regimes of these non-EU countries, as mandated by the European Commission.

According to the CRR, under well-defined conditions certain categories of exposures to entities located in countries outside the EU can benefit from the same preferential treatment applied to EU Member States exposures in terms of capital requirements. This would imply that EU credit institutions can apply preferential risk weights to relevant exposures to entities located in those countries.

In particular, as specified in Article 107 (3)(4) of CRR, such preferential treatment is only available if and when the European Commission adopts an Implementing Decision determining that the country`s prudential supervisory and regulatory requirements are at least equivalent to those applied in the EU. To this extent, within its mandate to promote supervisory convergence, the EBA has been asked to provide technical advice to the European Commission on the equivalence of the legal and supervisory regimes in countries outside the EU.

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