New and Updated Legislation
The Supervisory Consolidation (Credit Institutions) Regulations (S.L. 371.22) have been published in February 2022 to cater for the consolidated supervision of credit institutions, separately from investment firms. These regulations introduce criteria for the establishment of the MFSA as the consolidated supervisor of credit institutions whilst transposing the CRD V. This change, amongst others, has an impact on the credit institutions that are supervised on a consolidated basis by the MFSA;
The CRR (Implementing and Transitional Provisions) Regulations (S.L. 371.17) have been also amended in 2022 to cater for applicable options and discretions emanating from CRR II. Further changes have also been undertaken for the purposes of clarification;
The provisions in relation to the ranking of creditors vis-à-vis credit institutions have been shifted to the Recovery and Resolution Regulations (S.L. 330.09). These amendments have repealed article 29A of the Banking Act (Chapter 371 of the Laws of Malta) and the new provisions are now incorporated in regulation 108 of the Recovery and Resolution Regulations mentioned above;
New and Updated Banking Rules
The Banking Rule BR/12 on Supervisory Review Process of Credit Institutions was amended in the beginning of the year to reflect the amendments introduced by the CRD V with respect to the elements of the Supervisory Review and Evaluation Process (SREP).
The Banking Rule BR/14 on Outsourcing by Credit Institutions was amended in order to amend the notification time period and insert the respective reference to the BR/24 on Internal Governance. Furthermore, paragraph 48A mirroring the EBA Guidelines on Outsourcing Arrangements was also added;
The Banking Rule BR/15 on Capital Buffers of Credit Institutions was amended in 2022 mainly to complete the transposition of the CRD V in line with the legislative amendments undertaken in 2021;
The Banking Rule BR/21 on Remuneration Policies and Practices was amended in 2022 to cater for the respective amendments of the CRD V, the options and discretions of the MFSA in relation to remuneration policies as well as implementation of the amendments from the revised EBA Guidelines on; Sound Remuneration, Benchmarking Exercises on Remuneration Practices, the Gender Pay Gap and Approved Higher Ratios, and Data Collection Exercises regarding High Earners.
The Banking Rule BR/24 on Internal Governance of Credit Institutions which was published in the early months of this year has been pivotal in enhancing the internal governance requirements for all credit institutions authorised in Malta. The new Rule implements requirements from the EBA Guidelines on Internal Governance as well as the EBA Guidelines on ICT and Security Risk Management. The Rule also makes reference to the MFSA Guidance on Technology Arrangements, ICT and Security Risk Management;
The Banking Rule BR/25 on Financial Holding Companies and Mixed Financial Holding Companies was published in July 2022. This new Rule complements article 11B of the Banking Act that introduced the approval and exemption process for financial holding companies and mixed financial holding companies within a banking group. This approval and exemption process has been introduced in the EU through the CRD V. New application forms and declaration forms have also been introduced through applicable annexes to the new Rule;
The Banking Rule BR/26 on the Stress Testing Requirements of Credit Institutions was published in October 2022. This Rule specifies the stress testing requirements of credit institutions, providing the common organisational and methodological requirements, thus implementing the EBA Guidelines on institutions’ stress testing.
The Banking Rule BR/27 on the Application of Certain Options and National Discretions was published in November 2022. This new Rule supplements the Subsidiary Legislation 371.17 by laying down further conditions and information on the options and national discretions (referred to as ‘ONDs’) stipulated therein and implements certain ONDs laid down in the Commission Delegated Regulation (EU) 2015/61 on the Liquidity Coverage Requirement.
Check out this MFSA webpage for a list of all the updated Banking Rules published by Banking Supervision.
Circulars issued and published by the MFSA in 2022
Check out this MFSA webpage for a list of circulars published by Banking Supervision.