Progress of the EU Commission’s Proposals on the Securitisation Framework

Following the Authority’s previous update related to the European Commission’s proposal on the securitisation framework, on the 19 December 2025 the Council issued a press release announcing that it agreed on a position related to this framework.  The Council declared that its position “re-calibrates capital requirements for investments by banks in different types of securitisations in a risk sensitive manner”. Moreover, and amongst others, the Council is supporting the Commission’s proposal for a safer “resilient” securitisation category.

From a prudential perspective, the ECB issued a dedicated opinion on the suggested changes.  The ECB broadly welcomes the proposed reforms to the EU securitisation framework, viewing them as supportive of market growth, integration, and risk transfer to investors, which can enhance lending to the real economy.  It highlights that sustainable development depends amongst others, on simple, standardised products, proportionate due diligence, and streamlined disclosure that preserves data quality and key risk information, including climate‑related data.  Furthermore, the ECB calls for appropriate safeguards and clarity, advocating targeted and cautious recalibration of capital, risk‑retention, SRT (Significant Risk Transfer), and liquidity rules.

At the current juncture, the Council and the European Parliament have entered into negotiations to finalise the related legal texts.

EU Commission’s Draft Delegated Act for Banks’ Market Risk

On 22 April 2026 the Commission has launched a public consultation on a draft Delegated Act amending Regulation (EU) 575/2013 (the ‘CRR’) regarding temporary target operational relief measures and targeted multipliers of the calculation of an institution’s own funds requirements for market risk.

The aim of the draft Delegated Act is to support a level playing field for EU banks competing internationally in trading activities by offsetting the negative capital impact of the Fundamental Review of the Trading book (FRTB) for a period of three (3) years, starting from 1 January 2027. This will follow the current Commission Delegated Regulation (EU) 2025/1496 amending the CRR which had postponed the application of the FRTB by another one (1) year to end-2026.

The delegated is expected to be adopted in May following the end of the public consultation, thereby providing banks and competent authorities with sufficient visibility to implement the framework from 1 January 2027.

Regulatory Publications by the European Banking Authority

The EBA has published the following regulatory products, including technical standards, guidelines and reports since the latest publication of the Regulatory Update:

• On 29 October 2025 the EBA published the final draft RTS on the conditions and criteria for assessing the materiality of credit valuation adjustment (CVA) risk exposures arising from fair-valued securities financing transactions under Article 382(6) of the CRR, as well as the frequency of that assessment. The RTS introduce a quantitative threshold to determine whether such exposures are material and must be included in CVA own funds requirements. These draft RTS are part of the Phase 2 deliverables of the EBA roadmap on the implementation of the EU banking package in the area of market risk.
• On 05 November 2025 the EBA published the final Guidelines on environmental scenario analysis, complementing the EBA Guidelines on the management of ESG risks by specifying supervisory expectations regarding how institutions should conduct environmental scenario analysis. These Guidelines are built around the following two pillars which aid institutions in embedding environmental risk considerations more effectively into their overall risk management and strategic planning processes:
  • integration of environmental risks into the institutions’ existing stress-testing frameworks,
  • resilience analysis

These Guidelines form part of the EBA’s roadmap on sustainable finance for the integration of ESG risks into the prudential framework and fit within the broader roadmap on the implementation of the EU banking package.

The Authority will be implementing these Guidelines, together with the Guidelines on the management of ESG risks, through the publication of a new Banking Rule on ESG risks. The Rule is expected to be published together with the publication of the legal instruments transposing the CRDVI.

• On 25 November 2025 the EBA published the final technical package for version 4.2 of its reporting framework. The draft technical package provides the standard specifications which include the validation rules, the data point model (DPM) and the XBRL taxonomies to support the following requirements:
• • full rollout of DPM 2.0 and enhanced glossary,
  • instant payments reporting,
  • resolution planning,
  • operational risk (COREP OF),
  • MREL decisions, and
  • supervisory benchmarking for market risk.

• Driven by the CRR3, which confers a new mandate onto the EBA regarding the Standardised Approach of credit risk, on 10 December 2025 the EBA published the final draft amending RTS on the types of factors to be considered by national authorities in assessing the appropriateness of real estate risk weights.
• On 12 December 2025 the EBA published its final draft RTS on structural foreign exchange (FX) under the CRR. The RTS aim to ensure a harmonised and consistent treatment of structural FX positions across the EU. In this regard, the following targeted clarifications to the existing framework were introduced:
  • maximum open position computation,
  • clarifications on risk positions, and
  • policies for illiquid currencies.
• On 16 December 2025 the EBA published its final draft RTS setting out the threshold up to which non-banking CSDs (“designating CSDs”) may use banking CSDs or credit institutions for cash settlement without entities needing additional authorisation. The RTS establish threshold levels and accompanying risk management requirements to ensure a proportionate and consistent prudential framework.
• On 08 January 2026 the EBA published its final draft RTS to strengthen supervisory cooperation for third-country branches. The RTS set out enhanced arrangements for cooperation and information exchange between competent authorities and establish the functioning of supervisory colleges for third-country branches operating in the EU. The RTS focus on the following two key areas:
  • colleges of supervisors for class 1 third-country branches, and
  • cooperation outside the college context

• On 09 January 2026 the EBA published a Report on prudential consolidation together with the final Guidelines on ancillary services undertakings under the CRR. The Report, which sets out recommendations aimed at improving the consistency, effectiveness and proportionality of the prudential consolidation framework, covers the following elements:
  • simplification of sub-consolidation requirements,
  • improved alignment with accounting standards, both in terms of undertakings included within the scope of consolidation and relevant methods to be applied,
  • refinement of the definition of control, and
  • provides further clarity on how to determine the perimeter of prudential consolidation, especially when an insurance undertaking within a bank-led financial conglomerate acquires a financial institution and the so-called “Danish compromise” (Article 49 of the CRR) is applied by the parent institution.

The accompanying Guidelines specify criteria for identifying activities falling within the definition of ancillary services undertaking ensuring a more harmonised application of the framework by institutions and competent authorities. These Guidelines will be implemented by the Authority through an update to Banking Rule BR/32.

• On 09 January 2026 the EBA published the final draft RTS on booking arrangements for third-country branches under the CRD. The RTS specify requirements for the identification, recording and maintenance of a registry book of assets and liabilities, including minimum information content and risk-related information, to ensure harmonised supervisory practices across the EU.
• On 13 February 2026 the EBA published the final Guidelines on proportionate retail diversification methods under the CRR. The Guidelines sets out a harmonised framework for assessing whether retail portfolios are sufficiently diversified to qualify for the preferential risk weight, while ensuring a proportional application for smaller institutions. Similar to the Guidelines on ancillary services undertakings, these Guidelines are being implemented by the Authority through an update to Banking Rule BR/32.
• On 02 March 2026 the EBA published final Guidelines on instruments for the capital endowment requirement for third-country branches under the CRD. The Guidelines set out the list of eligible instruments that may be used to meet capital endowment requirements and define the minimum operational conditions ensuring these instruments remain available when needed for loss-absorbing purposes. The aim is to ensure that capital endowment resources are readily available to protect depositors and meet creditor claims in the event of resolution or winding-up of third-country branches.

In line with the framework on TCBs brought about by CRDVI, these Guidelines apply from 11 January 2027. Meanwhile, the Authority will be implementing these Guidelines through the publication of a new Banking Rule.

• On 05 March 2026 the EBA published its final report on the draft ITS on the supervisory reporting of third country branches under the CRDVI. The standards introduce harmonised reporting templates, definitions and frequencies to ensure consistent supervisory data across the EU, covering both branch-level and head-undertaking information. A proportionate “core + supplement” approach is maintained to reflect the size and complexity of branches. The aim is to provide supervisors with high quality information while ensuring proportionality, clarity and operational feasibility for reporting entities.
• On 19 March 2026 the EBA published the final draft amending RTS on own funds and eligible liabilities shortening the timeframe for competent and resolution authorities to process institution’s applications to reduce own funds and eligible liabilities instruments from four to three months.
• On 30 March 2026 the EBA published the RTS streamlining the supervisory approval process for changes to IRB models. The RTS reduce the number of model changes classified as material, enabling a more risk-based and proportionate supervisory approach and easing the administrative burden for both institutions and competent authorities, while maintaining appropriate supervisory oversight.
• On 29 April 2026, the EBA published its decision to partially delete sections of the Guidelines on connected clients. The decision follows the application of Commission Delegated Regulation (EU) 2024/1728 which introduces binding requirements setting out the circumstances in which institutions must identify groups of connected clients. In this regard, certain provisions of the Guidelines are no longer required, and have therefore been removed. An update to the Banking Rules by the Authority will also be carried out to reflect this decision.

Credit institutions are reminded that while technical standards enter into force following their publication in the Official Journal of the EU, they are expected to take note of these developments and prepare for their implementation. In relation to the various Guidelines, as outlined, these will be implemented by the Authority through an update to the Banking Rules framework. In the meantime, however, credit institutions and third-country branches are expected to take note of the requirements and conditions stipulated in these Guidelines and undertake the necessary changes for compliance purposes.

Credit institutions and third-country branches are encouraged to continuously follow developments at EBA level and participate in public consultations to provide their views and stances on upcoming regulatory products.

Interest Rate Risk

On 26 January 2026, the EBA published a Report on the implementation of the Interest Rate Risk in the Banking Book (“IRRBB”), which outlines the medium-to-long term supervisory priorities following the introduction of the IRRBB prudential package in 2022 and the first implementation report in 2025. The Report provides a forward-looking assessment of how the EU is adapting to the evolving interest rate environment and the regulatory expectations accompanying it.

The Report provides observations and analyses on several key focus areas, namely, supervisory outliers test (“SOT”) analysis, where it is noted a gradual adjustment of the banks’ risk management practices to the new interest rate environment. Notably, the number of outliers has improved on both metrics, whilst changes in the Economic Value of Equity (“ΔEVE”) and Net Interest Income (“ΔNII”) continue showing asymmetrical impacts.

The Report also focused on the monitoring of the five-year cap on non-maturity deposit (“NMD”) repricing, which continues to be an important harmonising benchmark across the European Union. Quantitative evidence as of the end-2024 indicates that this cap has had limited material impact for most banks, as internally modelled repricing profiles are typically already within five years. The EBA recommends that any deviation beyond five years should be exceptional, evidence-based, aligned with business model and hedging strategy, agreed through supervisory dialogue and transparently disclosed under Pillar 3.

The Report also examines commercial margin modelling, in which constant-spread modelling remains widely used. This is with the exception of NMDs due to their behavioural features, including pass-through lags and margin compression in low-rate environments. In the Report the EBA concluded that flexibility recommended for NMD margins should not be extended to other products unless there are similar material behaviour characteristics displayed.

Another key area of the Report concerns the definition and application of the Credit Spread Risk in the Banking Book (“CSRBB”). The Report highlights significant divergence across institutions, particularly regarding the treatment of amortised-cost instruments and the alignment of CSRBB perimeters for economic value and earnings measures. No banking-book instrument should be excluded ex ante, regardless of accounting classification or holding intention, and institutions should incorporate CSRBB into ICAAP, where material. Instruments measured at fair value, including IFRS 13 Levels 1 to 3, as well as amortised-cost items with measurable spread sensitivity, should be captured using market data, proxies, or model-based approaches.

Finally, the report provides an updated insight into hedging strategies, in which interest-rate swaps remain the dominant tool for mitigating IRRBB. Hedging significantly reduces outlier occurrences in the SOTs, particularly for economic value measures. The EBA encourages institutions to ensure that hedging frameworks consider both economic value and earnings perspectives, are well-governed, and are supported by robust back-testing.

Sustainable Finance

European Commission Proposal to Amend SFDR

During November 2025, the European Commission published a legislative proposal to revise the Sustainable Finance Disclosure Regulation (SFDR), aiming to simplify the framework, reduce inconsistencies, and better align disclosures with market practices and other EU legislation.

The proposal introduces a streamlined approach to disclosures by removing entity-level principal adverse impact reporting requirements for most financial market participants, thereby reducing overlaps with the Corporate Sustainability Reporting Directive (CSRD) and lowering compliance costs. Entity-level disclosures would in future be limited to the largest firms subject to revised CSRD thresholds. In addition, product-level disclosures would be significantly reduced and focused on key, decision-useful information to improve clarity, comparability, and usability, particularly for retail investors.

A central element of the reform is the introduction of a clear categorisation system for financial products making ESG claims. The proposed categories, “Sustainable”, “Transition”, and “ESG Basics”, are intended to provide a more intuitive framework for investors and build on existing market practices. Products within these categories would be required to allocate a substantial share of their portfolios (at least 70%) to investments aligned with the stated sustainability strategy and to exclude exposure to certain harmful activities and sectors. The proposal also restricts the use of ESG-related terms in product names and marketing materials to products that meet the categorisation criteria, as part of the broader efforts to mitigate greenwashing and enhance investor confidence.

The proposal is now with the European Parliament and Council for negotiations.

ECB Climate and Nature Plan (2024-2025) – Integration into Core Work

During January 2026, the European Central Bank (ECB) announced that it had further embedded climate and nature-related risks into its core activities following the conclusion of its 2024–2025 climate and nature plan.

The ECB confirmed its continued commitment to strengthening resilience to environmental risks by integrating climate and nature considerations across its policy and supervisory functions. It identified three priority areas for ongoing work: navigating the transition to a green economy, addressing the increasing physical impact of climate change, and assessing risks related to nature loss and degradation.

In addition, the ECB reported tangible progress in operationalising this integration. Climate and nature-related considerations have been further embedded into the monetary policy framework while enhancements in data, stress testing and scenario analysis have improved the assessment and monitoring of climate risks. Supervisory efforts have strengthened the banks’ capacity to identify and manage such risks, while the ECB has also advanced the integration of climate factors into its own portfolios and operations.

The announcement signals a further step in the ECB’s strategy to systematically incorporate environmental risks into its analytical frameworks and decision-making processes, reflecting the growing importance of such risks for financial stability and monetary policy.

EBA Opinion on Draft Amended European Sustainability Reporting Standards

On 18 February 2026, the EBA issued an opinion to the European Commission on the draft amended European Sustainability Reporting Standards (ESRS) developed by European Financial Reporting Advisory Group (EFRAG).

The EBA welcomed the progress made in simplifying and clarifying the standards, in particular the efforts to reduce reporting complexity and compliance costs. However, it raised concerns regarding the extent of the proposed reliefs and exemptions, especially where these are of a permanent nature. The EBA noted that such alleviations could significantly reduce the availability of quantitative sustainability information and potentially undermine the objectives of the review and increase the burden on users of disclosures, including financial institutions.

In this context, the EBA recommended that certain reliefs be subject to appropriate time limits and that institutions continue to develop robust capabilities to assess sustainability-related risks. It also highlighted that excessive or permanent exemptions could weaken the interoperability of EU standards with international frameworks and may require banks to seek additional information directly from counterparties. Overall, the opinion calls on the Commission to carefully consider the balance between simplification and the need to maintain decision-useful, comparable sustainability data.

Ongoing Work on Simplification of the Regulatory, Supervisory and Reporting Framework, and Competitiveness of the EU Banking Sector

Several initiatives are being undertaken by various EU institutions to make the regulatory framework simpler and the overall banking sector more competitive.  The goal of simplification is not to deregulate but to achieve the underlying legislative goals in a more efficient manner without hindering the stability of institutions.

During December, the ECB published the recommendations of the Governing Council’s High-Level Task Force on Simplification of the European regulatory, supervisory and reporting framework.  These recommendations, which have been presented to the European Commission, relate to a number of subjects, including the composition of the capital stacks, proportionality, harmonisation and regulatory transparency, the EU-wide stress test, harmonising supervisory practices, and mutual data sharing between European Authorities.

The EBA has similarly issued a dedicated report on the efficiency of the regulatory and supervisory framework. The publication provided 21 recommendations, covering areas related to the production of Level 2 and Level 3 regulatory products, the reporting burden for financial institutions, the EBA's contribution to the EU prudential regulatory framework, and internal working arrangements.  The stated aim is to preserve the resilience of the EU financial system, enhance the benefits of the Single Market, and maintain a level playing field across the EU.  To this effect during February, the EBA launched a public consultation on its Discussion Paper on the simplification and assessment of the credit risk framework.  With a similar objective in mind, the EBA issued another consultation at the beginning of April proposing a series of measures to simplify the EU supervisory reporting.

Other supporting legislation has been issued to this end during February as Directive (EU) 2026/470 (Omnibus I) was published in the Official Journal.  The EU Omnibus initiative introduces amendments to both the Corporate Sustainability Due Diligence Directive (CSDDD) and the CSRD, reducing the scope, compliance burden, and liability.  Overall, this Directive is aimed at improving competitiveness in the EU though a reduction in regulatory complexity in relation to sustainability obligations.

Another important initiative undertaken by the European Commission was the launching of a targeted consultation on the competitiveness of the EU banking sector.  The results are expected to feed into the Commission’s 2026 report on the competitiveness of the EU banking sector, which will ultimately help in achieving the goals of the savings and investment union (SIU) strategy.  The consultation touched upon three important areas comprising, banking competitiveness in the EU and globally, the single market and the banking union, and the complexity and effectiveness of the regulatory framework.