EACB appreciates the EBA’s efforts in trying to define what are the characteristics of retail deposits that should be subject to higher outflows according to article 409(3) of the CRR. We also appreciate that the EBA admits that the case of higher outflows on retail deposits is an exception to the rates in article 409(1) and 409(2).
We do, however, have some concerns relating to the proposed methodology which are described in detail in the following pages.
Too complex methodology
The proposed methodology seems rather too complex and could lead to problems when applied. It will be a challenge to register and judge all the mentioned aspects on a group-wide level. The diversity of systems is huge and customer-wide information is not always readily available everywhere. Aggregate data for deposits by person might be available, as it is required for the deposit protection schemes, but this is not valid for all types of deposits. Structured deposits, for example, are not under deposit protection schemes. Additionally, in some banks it may happen that the links with other products or the notice period deposits are not recorded in the systems, because they are characteristic only to specific products.
Even if available, the question remains how to collect the data. As the implementation date for the CRD-CRR is 1st January 2014, the banks will only have 6 months to develop and test the IT systems. This will not be feasible if the methodology is too complex. Moreover, while preparing the IT systems for the EBA observation period the banks will already use significant resources and even more additional resources will be needed to assess the proposed criteria.
Additionally, the remittance delay for liquidity data is 15 calendar days (as foreseen in the EBA Draft Implementing Technical Standards on Supervisory reporting requirements for liquidity coverage and stable funding). This is a very short delay which makes it very challenging to report on the liquid assets and net outflows and do all the other treatments requested as part of liquidity requirements.
While the costs are high, the added value of such an exercise remains limited, as the higher outflow for retail deposits should remain an exception to the rule. We thus favour a simpler approach with only a few relevant factors (high value deposits over 1 M EUR and rate driven deposits).
We think that the methodology should be simplified (fewer factors included – only main drivers) and the distinction of the two risk categories of risk factors deleted, as it seems unnecessary.
For the full position paper, please download the PDF.