EU & UK Reg Round Up: 07/05/2025
European Banking Authority
The EBA consults on draft amending technical standards on factors assessing the appropriateness of real estate risk weights 30 April 2025
The European Banking Authority (EBA) launched a consultation on April 30, 2025, for draft amendments to Regulatory Technical Standards (RTS) on factors for assessing real estate risk weights, as mandated by the revised Capital Requirements Regulation (CRR 3). The sole proposed change updates legal references to align with CRR3, ensuring consistency with related RTS on minimum loss given default (LGD) for retail exposures secured by immovable property. The consultation runs until May 30, 2025, with a public hearing scheduled for May 13, 2025. Comments can be submitted via the EBA’s consultation page.
The EBA publishes key indicators on climate risk in the EU/EEA banking sector 25 Apri l 2025
The European Banking Authority (EBA) launched an ESG dashboard to monitor climate-related risks in the EU/EEA banking sector, using Pillar 3 ESG disclosures. It highlights significant exposure (over 70% in most countries) to high climate-impact corporate sectors, indicating potential transition risks, and less than 30% exposure to physical risks, though data granularity varies. Real estate lending shows moderate energy efficiency (half in top two buckets), but relies on estimates. The Green Asset Ratio (GAR) averages below 3%, reflecting limited EU Taxonomy alignment, with higher loan GAR levels. The EBA will update the dashboard regularly, adjusting for revisions in Pillar 3 templates.
The EBA updates list of indicators used to perform risk assessments 16 April 2025
The European Banking Authority (EBA) released an updated list of indicators and a methodological guide for risk assessment and analysis, aligned with the EBA reporting framework version 4.0. The update covers profitability, solvency, operational risk, and new indicators from the Banking Package (CRR3/CRD6), ESG risks, and MREL requirements. It ensures consistent interpretation of key bank figures without increasing reporting burdens. The guidance supports competent authorities and users in conducting risk assessments and analyses.
ESAs publish Joint Annual Report for 2024 16 April 2025
The European Supervisory Authorities (EBA, EIOPA, ESMA) published their 2024 Joint Annual Report, detailing their collaborative efforts. The report highlights work on joint risk assessments, sustainable finance, operational risk, digital resilience, consumer protection, financial innovation, securitisation, financial conglomerates, and the European Single Access Point (ESAP). Key deliverables included policy products for the Digital Operational Resilience Act (DORA) and progress on the Sustainable Finance Disclosure Regulation (SFDR). Chaired by ESMA, the Joint Committee fostered coordination among the ESAs, the European Commission, and the European Systemic Risk Board (ESRB).
European Securities and Markets Authority
ESMA delivers technical advice on market abuse and SME Growth Markets as part of the Listing Act 07 May 2025
ESMA published technical advice to the European Commission to support the Listing Act’s goals of simplifying listing requirements and enhancing EU companies’ access to capital markets. For the Market Abuse Regulation (MAR), ESMA’s advice addresses protracted disclosure processes, conditions for delayed disclosures, and the Cross-Market Order Book Mechanism for identifying significant cross-border trading venues. For MiFID, it focuses on revising requirements for multilateral trading facilities to register as SME Growth Markets. The advice aids the Commission’s delegated acts, due by July 2026.
ESMA publishes the annual transparency calculations for non-equity instruments and bond liquidity date 30 April 2025
ESMA published the annual transparency calculations for non-equity instruments and the quarterly liquidity assessment for bonds under MiFID II/MiFIR. The non-equity calculations, including liquidity assessments and pre/post-trade thresholds, apply from June 2, 2025, to May 31, 2026, with results available in XML format and via the Financial Instruments Transparency System (FITRS) from April 30, 2025. The quarterly bond assessment identifies 1,371 liquid bonds, with transparency requirements effective from May 19, 2025, to August 17, 2025. Bond liquidity data is updated quarterly, with possible intra-quarter revisions published in FITRS.
ESMA issues supervisory guidelines to prevent market abuse under MiCA 29 April 2025
ESMA published guidelines to prevent and detect market abuse under the Market in Crypto Assets Regulation (MiCA). Aimed at National Competent Authorities (NCAs), the guidelines draw on Market Abuse Regulation (MAR) experience, outlining risk-based, proportionate supervisory practices tailored to crypto assets’ cross-border nature and social media influence. They promote a consistent supervisory culture through industry dialogue and NCA collaboration. The guidelines will apply three months after translation into all EU languages, with NCAs urged to begin implementation early and notify ESMA of compliance within two months of publication.
ESMA assesses the risks posed by the use of leverage in the fund sector 24 April 2025
ESMA released its annual risk assessment of leveraged alternative investment funds (AIFs) and its first analysis of UCITS using the absolute Value-at-Risk (VaR) approach. Hedge funds show the highest leverage among AIFs, while real estate funds face pressures from declining prices and outflows but remain resilient. GBP Liability-Driven Investment funds have increased resilience due to imposed interest rate risk limits. For UCITS, 8% use the VaR approach, with a small subset (2%) exhibiting high leverage and complex derivative exposures, resembling hedge funds and requiring close supervisory oversight due to liquidity and market risks.
ESAs Joint Annual Report for 2024 16 April 2025
The European Supervisory Authorities (EBA, EIOPA, ESMA) published their 2024 Joint Annual Report, outlining their collaborative work. Key focus areas included joint risk assessments, sustainable finance, operational risk, digital resilience, consumer protection, financial innovation, securitisation, financial conglomerates, and the European Single Access Point (ESAP). Major deliverables included policy products for the Digital Operational Resilience Act (DORA) and advancements in the Sustainable Finance Disclosure Regulation (SFDR). Chaired by ESMA, the Joint Committee enhanced coordination with the European Commission and the European Systemic Risk Board (ESRB).
Bank of England
Key elements of the 2025 CCP Stress Test 25 April 2025
The Bank of England’s 2025 Stress Test, announced on May 7, 2025, will assess the resilience of UK Central Counterparties (CCPs) – ICE Clear Europe, LCH, and LME Clear – against severe market stress and member defaults. The test focuses on a bespoke Baseline Market Stress Scenario (1 in 3,500 event), simulating trade fragmentation and sovereign debt risks, alongside multiplier scenarios for sensitivity and reverse stress testing. It evaluates credit risks, margin call impacts, and qualitative liquidity risks without a full Liquidity Stress Test. Using data from March 26, 2025, the exploratory exercise informs supervisory actions, with results to be published in Q4 2025.
External minimum requirements for own funds and eligible liabilities (MRELs) – 2025 24 April 2025
Bank of England published the 2025 external Minimum Requirement for Own Funds and Eligible Liabilities (MREL) for UK firms with resolution entities requiring MREL above minimum capital requirements (MCR). MREL ensures firms maintain sufficient equity and debt to absorb losses and recapitalize during resolution, minimizing public fund use. The disclosure, unchanged from March 2024, details firm-specific MRELs for bail-in (e.g., Barclays, HSBC) and transfer (e.g., Monzo, Starling) resolution strategies, based on December 2024 balance sheets and April 2025 MCRs. End-state MREL deadlines for transfer firms are extended pending policy revisions. Results are in Table A.
Credit Conditions Survey - 2025 Q1 17 April 2025
The Bank of England’s 2025 Q1 Credit Conditions Survey, conducted from March 3 to March 21, 2025, reports credit trends to end-February 2025. Secured household credit availability slightly increased in Q1 and is expected to increase in Q2, while unsecured credit increased and is expected to rise further. Corporate credit availability slightly increased for small and medium businesses but was unchanged for large firms, with no change expected in Q2. Demand for secured lending for house purchases and remortgaging increased in Q1, with remortgaging demand expected to rise in Q2. Unsecured lending demand increased, with further growth expected. Corporate lending demand rose across all firm sizes in Q1, with large firms expecting slight growth in Q2.
Bank Liabilities Survey - 2025 Q1 17 April 2025
The Bank of England’s 2025 Q1 Bank Liabilities Survey, conducted from March 3 to March 21, 2025, reports funding and capital trends to end-February 2025. Total funding volumes slightly increased in Q1, with retail deposits up and ‘other’ funding (e.g., wholesale) down; both are expected to rise in Q2. Funding costs increased for both retail and ‘other’ sources in Q1, with further increases expected. Household deposit supply rose, while corporate deposits slightly fell. Wholesale debt demand from UK and non-UK investors increased in Q1 but is expected to stabilize in Q2. Total capital levels rose in Q1 but are expected to slightly decline in Q2, with transfer prices slightly decreasing in both quarters.
Update on modification by consent of the Liquidity Coverage Ratio part of the PRA Rulebook – Third Country Covered Bonds 17 April 2025
The Prudential Regulation Authority (PRA) announced a pause in its modification by consent for third country covered bonds under the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook. Initially offered on April 8, 2025, the modification aimed to include certain third-country covered bonds as Level 2A High Quality Liquid Assets (HQLA) with a cap. Following technical comments and clarification requests, the PRA withdrew the modification to address these concerns. Firms can continue their current approach to recognising third-country covered bonds under the LCR and Liquidity (CRR) rules