The EACB welcomes the opportunity to comment on this EBA consultation paper. Outsourcing is a sensitive issue for cooperative groups and networks, whose organizational structure consistently relies on a division of tasks. Due to their distinctive “division-of-labour” structures, group / network entities or central institutions provide numerous services for the affiliated banks. This traditional supporting pillar finds its basis in the respective national legal frameworks. For example, the laws and statutes governing local cooperatives or their central institutions or associations regularly stipulate that the central support services organized in the respective network are to be offered by the central institution or used by the local banks belonging to the network. Also the CRR and the Commission delegated regulation on liquidity coverage requirement for credit institutions make reference to this situation. Moreover, it is stipulated in the statutes of many cooperative central institutions / bodies that their main mission is to provide services to local banks.
Such organizational structures, especially the bundling of tasks in specific entities, not only improve their cost efficiency and achieve economies of scale. In many cases, the local banks would not be able to reach the level of quality, maintenance and stability, which is now ensured by the central institution or common specialized entities due to the size, resources, specifiy technical knowledge of the latter.
In this context, we welcome that the EBA specifically reflects of outsourcing arrangements within a group - including the situation where institutions are permanently affiliated to a central body - and within an institutional protection scheme (IPS).
However, in our opinion, the guidelines do not sufficiently reflect the value of outsourcing, i.e. quality enhancing and risk reducing effects. Moreover, in consideration of the above-mentioned organizational structure (i.e. division of tasks), the guidelines should take into account this specific feature when it comes to a decision on outsourcing.
Finally, we believe that more emphasis should be put on the principle of proportionality that should be reflected not only with regard to the size of the institutions but also to the risk, the relevance and criticality of the outsourced functions.