European Banking Authority – EBA

The European Banking Authority (in English, EBA: European Banking Authority) is the competent supervisory body of the financial system of the European Union in everything related to the banking sector.

This is the body of the European Union responsible for ensuring transparency, stability and efficiency in the performance of European banks. It was created in 2011 by EU Regulation No. 1093/2010 and comes to replace the Committee of European Banking Supervisors (CEBS).

To correctly understand the functioning of the EBA, we must bear in mind the organizational framework of which it is a part of the European Financial Supervision System, designed in 2010, and consisting of four independent supervisory bodies:

  • European Banking AuthorityEBA: European Banking Authority).
  • European Securities and Markets AuthorityESMA: European Securities and Markets Authority).
  • European Insurance and Pensions AuthorityEIOPA: European Insurance and Occupational Pensions Authority).
  • European Systemic Risk Board ( ESRB: European Systemic Risk Board).

We can observe in the scheme that the powers of the EBA would include, in general, the protection of the rights of bank users (depositors, consumers and investors), the evaluation of the stability of the banking entities and the supervision of the transparency of the Finance system. Therefore, its scope extends to the development of a common regulatory system for the banking sector in a broad sense. From the regulation of payment systems or audit obligations to customer service policy.

Main functions of the EBA

  • Prepare the “Single Normative Code”of the European Union. This code aims to define standards for the protection of the banking client and eliminate the contradictions in the banking legislation of the Member States.
  • Evaluate the different risks that may affect banking entities: Analyzing their capital structure, provisions, cash ratios, etc. In fact, it is the European Banking Authority responsible for conducting the famous stress tests or bank resistance tests.
  • Strengthen international coordination among the competent supervisory bodies of the Member States.
  • Advise financial institutions on the interpretation of regulation and disseminate good banking practices. Actually, the powers of execution of the EBA are scarce. It is the European Central Bank (ECB) that takes center stage in this aspect. The EBA arises rather with the purpose of being a properly advisory body.

EBA structure

Board of Supervisors

  • Authorities of the Member States (Bank of Spain, in our case).

Board of directors

Resolution Committee

President EBA

EBA Executive Director

 

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