The countercyclical capital buffer (CCyB) is a macroprudential instrument that aims to protect banks against systemic risks arising from excessive credit growth in a member state.Read more
European Banking Authority (EBA)
The European Banking Authority (EBA) is the micro-prudential supervisory authority for the banking sector in Europe and forms part of the European System of Financial Supervision. The EBA has its seat in London. DNB is a member of the Board of Supervisors, the principal decision-making organ of the EBA.
The EBA is the successor to the Committee of European Banking Supervisors (CEBS) and was established effective 1 January 2011 by a Regulation of the European Parliament and the Council.
Tasks and powers
The EBA has the following main tasks:
- to contribute to the establishment of high-quality common regulatory and supervisory standards and practices;
- to contribute to the consistent application of EU regulation, in particular by contributing to a common supervisory culture and preventing regulatory arbitrage;
- to mediate and settle disagreements between EU supervisory authorities on the application of EU regulations.
To this end, the EBA has power to set binding technical standards, guidelines and recommendations. Binding standards are endorsed by the European Commission, have direct application and need not be implemented in national legislation and regulation. Guidelines and recommendations must be implemented nationally and operate on the “implement-or-explain” principle.
The so-termed Omnibus Directive determines the areas where the EBA is empowered to set binding technical standards or to settle disagreements with binding effect. To this end, the Directive refers to articles in the Capital Requirements Directive.
In the event of an emergency situation declared by the ESRB and the Council, the EBA has power to give instructions to a national supervisory authority. In such cases, the EBA only bypasses a national supervisory authority if the latter fails to apply an EBA instruction to the institution concerned and if European regulation is not applied correctly. However, an EBA instruction is subject to one important condition: under no circumstances may it have consequences for a Member State’s national budget.
Structure of the EBA
Board of Supervisors
The Board of Supervisors is composed of voting and non-voting members. The voting members are those at the head of national authorities in European Member States responsible for the (prudential) supervision of credit institutions. The non-voting members are the EBA chairperson and delegates from the European Commission, the ECB, the ESRB, the EIOPA and the ESMA.
The Board of Supervisors is an independent body whose members are required to act in the interests of the European Union. Mandated to guide the activities of the EBA, the Board of Supervisors is the supreme decision-making body. In principle, the Board of Supervisors decides by a majority of votes. Only decisions about binding technical standards, guidelines and recommendations are made on the basis of a qualified majority of votes as defined in the Treaty of Nice.
The EBA Management Board is composed of the EBA chairperson and six other voting members of the Board of Supervisors. The members are required to act in the interests of the European Union. The Management Board’s mandate is to ensure that the EBA carries out its mission and tasks in conformity with the regulations. Decisions are taken by a majority of votes.
The EBA chairperson represents the EBA and is elected by the Board of Supervisors. The EBA chairperson is responsible for the preparation of the activities of the Board of Supervisors and chairs the meetings of the Board of Supervisors and the Management Board. The EBA chairperson is elected for a term of five years, which may be extended once. Effective 1 March 2011, Andrea Enria (Italy) was elected as the first EBA chairperson. Thomas Huertas (United Kingdom) was appointed alternate chairperson by the Board of Supervisors.
The Executive Director is in charge of the management of the EBA and is elected by the Board of Supervisors. The Executive Director is responsible for the day-to-day management of the EBA and the preparation of the Management Board’s activities. The Executive Director ensures that the EBA’s annual work programme is executed in accordance with the instructions of the Board of Supervisors and under the supervision of the Management Board. The Executive Director is elected for a term of five years, which may be extended once. Effective 2 March 2011, Adam Farkas (Hungary) was elected Executive Director. His appointment must still be approved by the European Parliament.
EBA Standing Committees
The EBA membership structure consists of five Standing Committees and a Review Panel:
- Standing Committee on Regulation and Policy: shared chairmanship EBA Director on
Regulations and David Rozumek (Czech Republic);
- Standing Committee on Accounting, Reporting and Auditing: chairperson Didier Elbaum (France);
- Standing Committee on Oversight and Practices: chairperson Fernando Vargas (Spain);
- Standing Committee on Operations and IT: chairperson EBA Director on Operations;
- Standing Committee on Financial Innovation: chairperson Anthony Kruizinga (Netherlands);
- Review Panel: chairperson EBA Alternate Chairperson, Thomas Huertas (United Kingdom).
Joint Board of Appeal
The Joint Board of Appeal is a joint body representing all three European Supervisory Authorities. Composed of six members, it decides on appeals lodged against individual decisions of the EBA. Appeal from decisions by the Joint Board of Appeal lies with the Court of Justice of the European Union. Employees of the EBA, national supervisory authorities and other institutions affiliated with the EBA are barred from membership of the Joint Board of Appeal. Decisions are taken by a majority of votes of at least four out of the six members.
Banking Stakeholder Group
To promote consultations with all stakeholders in fields relevant to the Authority’s tasks, a Banking Stakeholder Group will be established. The Banking Stakeholder Group will be designed to facilitate the consultation process on binding technical standards, guidelines and recommendations of the EBA.
The Banking Stakeholder Group will be composed of 30 members appointed to represent in balanced proportions credit and investment institutions operating in the European Union, consumers and other stakeholders. At least five of the members will be representatives of academia. Ten members will be delegates from financial institutions, three of whom on behalf of cooperative banks and savings banks.
Other European Supervisory Authorities
The EBA is the counterpart of the European Securities and Markets Authority (ESMA) in the securities sector and the European Insurance and Occupational Pensions Authority (EIOPA) in the insurance and pension sector.