Over the course of 2022, the EU’s sanctions regime was regularly revised and tightened in order to allow the EU to react to the Russian invasion of the Ukraine. Firms can assess the current landscape regarding sanctions, as well as monitoring any future developments to the sanctions regime on the Central Bank of Ireland’s (CBI) website.

Retail Banking Review

In May 2022, the Department of Finance launched a consultation on the Retail Banking Review and in August 2022 the CBI published a response to the public consultation. Alongside discussing its regulatory approach to retail banking, the CBI also discussed its plans regarding:

• The transition of the banking ecosystem towards a digitalised system and required innovations,
• A potential revision of the retail conduct framework, as well as approaches to ensure access to basic services, and
• To introduce competition to the market.

Macroprudential capital buffers

In June 2022, the CBI published an updated strategy for the purposes of providing clarity on the use of macroprudential capital buffers and the CBI’s new strategy on the countercyclical capital buffer. The CBI made clear that when macro risks are both not elevated and not subdued, the CBI intends to set a positive countercyclical capital buffer rate.

Credit risk

In June 2022, the European Commission published a Commission Delegated Regulation (CDR) that was intended to supplement the Capital Requirements Regulation (CRR). The CDR was published in order to specify how to determine the indirect exposures to a client arising from derivatives contracts where the contractual counterparty is not the client, but the underlying instrument to which the derivative relates belongs to a client. The European Commission also published Delegated Regulation (EU) 2022/954 which amended the calculation of specific and general credit risk adjustments under the CRR.

In addition, the European Commission adopted two delegated regulations intended to supplement the CRR with regards to market risk. The first specified the criteria for assessing the modellability of risk factors under the internal model approach and specifying the frequency of that assessment under Article 325 of the CRR. The second specified the technical details of back-testing and profit loss attribution requirements.

Conduct standards

In July 2022, the Central Bank (Individual Accountability Framework) Bill 2022 was placed before the Dáil. The 2022 Bill has a wide ranging impact on all financial services providers, however the introduction of new conducts standards and the new Senior Executive Accountability Regime are likely to impact banks once introduced.

Mortgage measures framework

In October 2022, the CBI announced a major shakeup in the regulation of the mortgage market, introducing changes to the mortgages measures framework. First time buyers will now be allowed to borrow up to four times their gross income, along with the loan-to-value for second and subsequent buyers increasing to 90%.

Daisy chain regulation

Finally, the ‘daisy chain’ regulation, Regulation (EU) 2022/2036, was introduced in October 2022, changing the prudential treatment of global systemically important institution groups, and providing regulators with new resolution powers. This regulation amended the CRR.

Comment

Although 2022 has not seen the kind of sweeping regulatory change for banking that may have occurred in other years, there have still been a number of changes throughout the year that firms will need to be cognisant of.

In 2023 we are likely to see further focus on sanctions by regulators. As the war in Ukraine continues, it seems likely that currently standing sanctions will last, and further developments to EU sanctions also seem likely. This heightened sanctions awareness should be paired with AML/CTF considerations to ensure a robust approach to financial crime by all firms. Finally, firms should be aware that further developments are expected with regards the 2022 Bill, with the CBI due to publish guidelines in 2023.

For more information, contact a member of our Financial Regulation team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.