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On 02 October 2024, the European Banking Authority (EBA) published its Work Programme for 2025, outlining its plan to fulfil its mission and mandates for the upcoming year, based on EU legislation and its founding regulation. The Programme supports broader EU financial sector priorities, organized into five key areas for the next three years: (i) the EU Single Rulebook, (ii) Financial stability, (iii) Data management, (iv) Oversight of DORA and MiCAR and (v) conduct and AML/CFT supervision. In more detail, in 2025, EBA will address a wide range of mandates related to the financial sector, with a strong focus on implementing the EU banking package (CRR III/CRD VI) to further develop the EU Single Rulebook. Its ongoing analyses, risk metrics and stress – testing methodologies aim to ensure financial stability and address risks from economic and geopolitical developments. Additionally, the EBA will begin overseeing critical 3rd party IT services under DORA and supervising significant crypto – asset providers under MiCAR. It will also establish a new EU AML – CFT framework.

The publication from BIS highlights the significance of climate scenario analysis in financial institutions, particularly in the context of emerging regulatory standards. The increasing awareness of climate change as a global risk has led to a need for more advanced methods of assessing potential financial impacts. Climate Scenario analysis provides a forward – looking approach, which is crucial in navigating the uncertain landscape of climate – related risks. The publication also emphasizes the growing challenges associated with the adoption of these methods. To address these challenges and enhance transparency, regulatory bodies such as the ISSB, have introduced new standards, which aim to improve the quality of climate – related disclosures.

The publication from the EBA sets out the priorities for resolution authorities for 2025 and reports on the progress achieved in 2023. It focuses on ensuring the effective implementation of resolution strategies, enhancing management information systems for valuation, and improving liquidity strategies during resolution. The report also highlights the challenges encountered and the measures taken by resolution authorities to improve banks' resolvability and readiness to handle financial crises effectively.

In the realm of financial risk management, particularly within the ambit of Basel regulations, the Advanced Internal Rating-Based (AIRB) approach stands as a cornerstone for banks and financial institutions aiming to optimise their capital allocation while adhering to stringent regulatory standards.

In today's data-driven financial and economic landscape, the evaluation of mortgage loan default risks has significantly evolved due to enhanced data insights and sophisticated model techniques. Predictive modelling techniques have risen to prominence due to their ability to enhance decision-making, streamline lending processes, and ultimately enhance transparency and risk management of financial institutions.

In May 2024, European Central Bank (ECB) released its final guide on effective risk data aggregation and risk reporting, accompanied by a feedback statement on the consultation that shaped the guide. This document aims to address persistent challenges in risk data management within financial institutions, emphasising the importance of accurate and comprehensive data for sound decision-making and regulatory compliance.

In May 2023, the PRA has issued a Supervisory Statement (SS1/23) as part of a Policy Statement (PS 6/23) which also incudes feedback on the consultation paper (CP) 6/22 - Model Risk Management Principles for Banks. The policy becomes effective on Friday, 17 May 2024.

In 2023, the ECB Banking Supervision conducted two separate stress test exercises involving euro area's significant institutions. A total of 57 institutions were directly supervised in the EU-wide test coordinated with other financial authorities like the European Banking Authority (EBA), while 41 additional significant institutions were part of a parallel stress test overseen by the ECB. The results published on the 28th July 2023

Climate change is not just an environmental issue; it's a financial one too. The Financial Stability Board (FSB) has been at the forefront of addressing the financial risks associated with climate change. Their 2023 progress report on the "FSB Roadmap for Addressing Financial Risks from Climate Change" provides valuable insights into the progress made and the challenges ahead.

Overview of the BIS newsletter on credit risk issues, addressing key areas of concern for banks and financial institutions and ongoing challenges in credit risk management and provisioning as an aftermath of the persisting effects of the COVID-19 pandemic.

This article delves into the DLT Pilot Regime, its objectives, and its significance in the European financial services sector. For more information on how the DLT Pilot Regime can benefit your business, contact Grant Thornton Cyprus, a leading provider of professional services.

The EBA will integrate ESG risks considerations into its framework over the next three years to support the EU's transition to a more sustainable economy. Read more

The report highlights the main updates made to integrate the climate models in order to reflect the most recent climate data and economic outlook on macroeconomic variables, used as part of the models, and consequently, on both physical and transition risks.

EBA published, on the 21st of June 2022, draft principles in assessing representativeness of COVID-19-impacted data in re-calibration of IRB models. The Supervisory handbook that will be published later in 2022 will include these principles, aiming at ensuring a harmonised approach. COVID events and especially the use of moratoria and other public measures may have led to changes in default rates.

The EBA Annual Report was published on the 15th of June 2022, highlighting the main achievements made in 2021, providing an overview of the key priorities for the coming year.

The CySEC (Cyprus Securities and Exchange Commission) issued a new update regarding CASP (Crypto Asset Service Providers) to register their services.