U.S. Financial Industry Developments
Federal Banking Agencies Issue Final Rule to Exempt Commercial Real Estate Transactions of $500,000 or Less from Appraisal Requirements:
On April 2, 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a final rule that increases the threshold for commercial real estate transactions requiring an appraisal from $250,000 to $500,000. Press Release. Rule.
Federal Reserve System Publishes Annual Financial Statements
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On March 23, 2018, the Federal Reserve System announced that it released the 2017 annual audited financial statements for the Federal Reserve Banks. The 2017 earnings were approximately $80.7 billion. Release.
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European Financial Industry Developments
EC Publishes Report on the Application of Title III of the Solvency II Directive (2009/138/EC)
The European Commission ("EC") has published a report on the application of Title III (of the Solvency II Directive) on April 5, 2018.
The EC has commented that, given the need for the Solvency II Directive to be generally evaluated in 2020, only one area of the group supervision regime within Article 242(2) of the Directive requires any legislative amendments at this point in time. This relates to group internal models, and as member states have often diverged on this point, the EC has stated that the European Insurance and Occupational Pensions Authority ("EIOPA") will need enhanced powers to bring about convergence.
A proposal to reform the European System of Financial Supervision ("ESFS") by the EC, published in September 2017, contains proposals to amend the Directive in order to do this, and to generally mitigate any potential divergences in the approval and supervision of group internal models.
Finally, the report also confirms that the EC will report on the transition period for institution for occupational retirement provisions ("IORPs") that are operated by relevant life insurers. Pending a further extension of the decision, the EC states that the legislative proposal relating to this could be imposed before the end of 2022.
To view the report, please click here.
ESMA Confirms That Canada and South Africa Will Continue to Meet All CRA Regulation (Regulation 1060/2009) Requirements From June 2018
The European Securities and Markets Authority ("ESMA") has on April 4, 2018 published a press release which confirms that Canada and South Africa will continue to meet all requirements for endorsement under Art 4(3) of the Credit Rating Agencies Regulation ("CRA Regulation").
In the release, ESMA confirms that the legal and supervisory frameworks of Canada and South Africa will continue to meet the requirements for endorsement under the CRA Regulation from June 1, 2018. This was confirmed following an assessment based on the methodological framework applicable under the CRA Regulation. As a result of this confirmation, any CRAs registered in the EU to endorse credit ratings from Canada and South Africa will not be disrupted from June 1, 2018.
To view the press release, please click here.
ESMA Publishes Final Report on Technical Advice Under Prospectus Regulation (EU) 2017/1129
European Securities and Markets Authority ("ESMA") has, on April 3, 2018, published its final report relating to technical advice under the Prospectus Regulation.
Within the report, ESMA states that the new Prospectus Regulation is designed to simplify the structure of the prospectus itself, and to reduce costs of issuing capital (alongside investor protection). ESMA also notes that the High-Level Expert Group on Sustainable Finance ("HLEG") recommended the strengthening disclosure of all information relating to sustainability issues that integrate all environmental, social and governance ("ESG") aspects.
The report has now been delivered to the European Commission ("EC") whereupon, subject to its approval, the technical advice will form the basis for the delegated acts to be adopted by the EC by, at the latest, January 21, 2019.
To see the final report and press release, please click here.
Rating Agency Developments
On April 3, DBRS updated its North American CMBS Multi-borrower Rating Methodology. Release.
On April 3, Fitch issued rating criteria for RMBS Lenders' Mortgage Insurance. Release.
On April 3, Moody's updated its rating methodology for the Mining Industry. Release.
On April 3, Moody's updated its rating methodology for the Passenger Airline Industry. Release.
On March 28, 2018, Moody's issued a statement that its US retail REITs generally will not be affected by Toys R Us' plans to liquidate all its US Stores. Release.
