The ECB Published a Recommendation on Dividend Distribution Policies
On January 28, the European Central Bank ("ECB") published a recommendation to establish dividend policies using conservative and prudent assumptions in order, after any distribution, to satisfy the applicable capital requirements.
The ECB has published recommendations with regard to Category 1, Category 2 and Category 3 credit institutions. Category 1 credit institutions should only distribute their net profits in dividends in a conservative manner to enable them to continue to fulfil all the Pillar 1 requirements. Category 2 credit institutions should not only distribute their net profits in dividends in a conservative manner but should also only pay out dividends to the extent which is consistent, at a minimum, with a linear path towards the fully loaded ratios required by the Common Equity Tier 1 capital ratio. Category 3 credit institutions which under the 2014 comprehensive assessment have a capital shortfall should, in principle, not distribute any dividend. Recommendation.
ECON Votes in Favor of the MIF Regulation
On January 27, the Economic and Monetary Affairs Committee ("ECON") released a press release stating that it had voted in favour of the proposed Regulation on multilateral interchange fees ("MIF Regulation"). This vote confirms an informal deal struck with the Council of Europe in December and will enforce a cap on the fees that banks can charge retailers for processing shoppers' payments.
The European Parliament as a whole is expected to vote on the deal at the second plenary session in April. Press Release.
ESMA Publishes an Opinion on Draft RTS on Clearing of Interest Rate Swaps under EMIR
Article 5(2) of Regulation (EU) No 648/2012 (EMIR) requires the European Securities and Markets Authority (ESMA) to develop draft regulatory technical standards specifying, inter alia, the class of OTC derivatives that should be subject to the clearing obligation, the date or dates from which the clearing obligation takes effect, including any phase in and the categories of counterparties to which the obligation applies.
In October 2014, ESMA submitted a draft regulatory technical standard (RTS) on the clearing obligation in respect of interest rate swaps to the European Commission. On 18 December 2014, the Commission submitted to ESMA a modified version of the RTS (the "modified RTS") introducing, among others, (1) amendments to the date on which the frontloading obligation starts to apply and (2) a new provision on the treatment of non-EU intragroup transactions. In the modified RTS, the Commission proposed that for a period of maximum three years, any third country shall be deemed equivalent within the meaning of Article 13(2) of EMIR. The effect would be to allow, for a period of three years, financial counterparties to apply for the intra-group exemption in respect of their transactions with any third-country entity in the absence of decisions on equivalence.
On January 29, ESMA published an opinion on the modified RTS stating that ESMA considers that the Commission's proposal in relation to non-EU intra group transactions is not appropriate from a legal perspective. ESMA noted that (i) the adoption by the Commission of implementing acts on equivalence under Article 13 is the only procedure envisaged under EMIR to establish whether third-countries can be considered as having legal, supervisory and enforcement frameworks equivalent to EMIR; and (ii)any provision that has an effect equivalent to that of an implementing act on equivalence under Article 13, although limited in time and scope, but without the examination procedure referred to in Article 13(2), may have unintended consequences and therefore requires a very careful review. ESMA will explore, in coordination with the Commission, a different manner to incorporate that provision. Opinion.
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