European Banking Authority (EBA)

About the European Banking Authority
The European Banking Authority (EBA) is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector.

The main task of the EBA is to contribute to the creation of the European Single Rulebook in banking whose objective is to provide a single set of harmonised prudential rules for financial institutions throughout the EU. The Authority also plays an important role in promoting convergence of supervisory practices and is mandated to assess risks and vulnerabilities in the EU banking sector.

The EBA was established on 1 January 2011 as part of the European System of Financial Supervision (ESFS) and took over all existing responsibilities and tasks of the Committee of European Banking Supervisors.
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The European System of Financial Supervision (ESFS)
The European system set up for the supervision of the financial sector is made of three supervisory authorities: the European Securities and Markets Authorities (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA). The system also comprises the European Systemic Risk Board (ESRB) as well as the Joint Committee of the European Supervisory Authorities and the national supervisory authorities.

Whilst the national supervisory authorities remain in charge of supervising individual financial institutions, the objective of the European supervisory authorities is to improve the functioning of the internal market by ensuring appropriate, efficient and harmonised European regulation and supervision.

Missions and tasks
The main task of the EBA is to contribute, through the adoption of binding Technical Standards (BTS) and Guidelines, to the creation of the European Single Rulebook in banking. The Single Rulebook aims at providing a single set of harmonised prudential rules for financial institutions throughout the EU, helping create a level playing field and providing high protection to depositors, investors and consumers.

The Authority also plays an important role in promoting convergence of supervisory practices to ensure a harmonised application of prudential rules. Finally, the EBA is mandated to assess risks and vulnerabilities in the EU banking sector through, in particular, regular risk assessment reports and pan-European stress tests.

Other tasks set out in the EBA's mandate include:

• investigating alleged incorrect or insufficient application of EU law by national authorities
• taking decisions directed at individual competent authorities or financial institutions in emergency situations
• mediating to resolve disagreements between competent authorities in cross-border situations
• acting as an independent advisory body to the European Parliament, the Council or the Commission.
• taking a leading role in promoting transparency, simplicity and fairness in the market for consumer financial products or services across the internal market.

To perform these tasks, the EBA can produce a number of regulatory and non regulatory documents including binding Technical Standards, Guidelines, Recommendations, Opinions and ad-hoc or regular reports.

The Binding Technical Standards are legal acts which specify particular aspects of an EU legislative text (Directive or Regulation) and aim at ensuring consistent harmonisation in specific areas. The EBA develops draft BTS which are finally endorsed and adopted by the European Commission. Contrary to other documents such as Guidelines or Recommendations, the BTS are legally binding and directly applicable in all Member States.

Organisation
The EBA is represented externally by its Chairperson whose role is also to prepare the work and to lead the the discussions at the Board of Supervisors' table. An Executive Director is also appointed with the tasks of preparing the Management Board meetings and ensuring the day-to-day operational work of the Authority.

The two governing bodies of the EBA are:

• The Board of Supervisors which is the main decision-making body of the Authority. It takes all policy decisions of the EBA, such as adopting draft Technical Standards, Guidelines, Opinions and Reports.
• The Management Board whose role is to ensure the Authority carries out its mission and performs the tasks assigned to it. In this respect, it is entrusted with the power to propose, among other things, the annual work programme, the annual budget, the staff policy plan and the annual report.

The EBA works closely with the other European Supervisory Authorities (ESAs) in the framework of the Joint Committee on issues of cross-sectoral relevance. In particular, the Joint Committee works in the areas of supervision of financial conglomerates, accounting and auditing, micro-prudential analyses of cross-sectoral developments, risks and vulnerabilities for financial stability, retail investment products and measures combating money laundering.

Finally, in order to effectively protect the rights of parties affected by decisions adopted by the EBA, a Board of Appeal has been set up.
 

Working process
The EBA carries out its tasks and mandates in an effective and transparent way, trying to ensure that national authorities, stakeholders and other interested parties can be informed of the Authority's work and are able to provide inputs.

All deliverables drafted by the Authority are discussed in technical working groups and standing committees where national authorities can provide inputs. Where necessary, the EBA also cooperates with other bodies and institutions.

Open public consultations are conducted, where appropriate, on regulatory products (Technical Standards, Guidelines, etc.) to ensure stakeholders and all interested parties can provide inputs on future banking standards and Guidelines. Moreover, the Authority also seeks comments and advice from the Banking Stakeholders Group, a body established by the EBA Regulation to facilitate consultations with stakeholders. It is composed, in balanced proportions, of representatives from credit and investment institutions, their employees' representatives, consumers, users of banking services and top-ranking academics. Finally, where appropriate, the EBA conducts a costs and benefits analysis on all proposals.

Final products are adopted by the Board of Supervisors which votes by simple majority, except in the case of regulatory products (Technical Standards, Guidelines and Recommendations) where the voting is by qualified majority following the same rules as those applied in the Council of the European Union.

Finally, in the case of Binding Technical Standards, the EBA is mandated to adopt only draft rules that when endorsed by the European Commission are integrated into EU law and become directly applicable and binding across the Single Market.

Regulation and policy
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Supervisory convergence
One of the EBA's key tasks is to promote convergence of supervisory practices to a high standard so as to ensure that regulatory and supervisory rules are implemented equally across all Member States. Convergent supervisory practices are indeed fundamental to achieve consistent outcomes and a truly level playing field, which are the basis of the single market.

This section illustrates the EBA's activities contributing to strengthening supervisory convergence, which range from the definition of guidelines and best practices, active participation in colleges of supervisors and organisation of dedicated training, the performance of peer reviews and other EBA independent assessments aimed at evaluating the degree of convergence.

This section also provides disclosure on the implementation of the prudential framework by Member States, including adopted options and national discretions as well as references to supervisory practices in the area of SREP and national statistical data on the banking sector, credit risk, operational risk, market risk, and supervisory actions and measures.
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Risk analysis and data
One of the EBA's oversight tasks is to identify and analyse trends, potential risks and vulnerabilities stemming from the micro-prudential level, across borders and sectors with the aim of ensuring the orderly functioning and integrity of financial markets and the stability of the financial system in the EU.

This section aims at providing an overview of the Authority's activity of collecting, storing and managing data to perform risk analysis and stress tests for the purpose of market economic analyses as well as impact assessments of potential market developments.

This section includes also other aggregate statistical data on key aspects of the implementation of prudential framework in each Member State as well as the credit institution register which gathers information on institutions which have been granted the authorisation to operate within the European Union and European Economic Area countries (EEA).
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Consumer corner
The European Banking Authority (EBA) promotes a transparent, simple and fair internal market for consumer financial products and services. The EBA seeks to foster consumer protection in all EU Member States, by identifying and addressing consumer detriment in the financial services sector. 
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Sources:
http://www.eba.europa.eu/
http://thejournalofregulation.com/en/institutions-portals/