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CONSOLIDATED ANNUALACTIVITY REPORT OF THEEUROPEAN BANKING AUTHORITY

YEAR 2018

EBA CONSOLIDATED ANNUAL ACTIVITY REPORT 2018

Consolidated Annual Activity Report ofthe European Banking Authority

Year 2018

[In pursuance of FR 1605/2002, FFR No 12711/2013]

1 Regulation (EU) No 1271/2013 of 30 September 2013 on the framework financial regulation for the bodies referred toin Article 208 of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council.


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Introduction 5

Executive summary 6

Part I Policy achievements of the year 8

Part II Management 12

2.1 Management Board 122.1.1 Management Board composition as of 31 December 2018 122.1.2 Board of Supervisors composition by end of 2018 13

2.2 Major developments 122.3 Budgetary and financial management 152.4 Human resources (HR) management 162.5 Assessment by management 18

2.5.1 Overall budget implementation rate 182.5.2 Legality and regularity 182.5.3 Validation of the accounting system 182.5.4 Procurement procedures 19

2.6 Budget implementation tasks entrusted to other services and entities 182.7 Assessment of audit results during the reporting year 19

2.7.1 Internal Audit Service (IAS) 192.7.2 Internal Audit Capability (IAC) 192.7.3 European Court of Auditors (ECA) 19

2.8 Follow-up of recommendations and action plans for audits 202.8.1 Internal Audit Service (IAS) 202.8.2 Internal Audit Capability (IAC) 212.8.3 European Court of Auditors (ECA) 21

2.9 Follow-up of observations from the discharge authority 21

Part III Assessment of the effectiveness of the internal control systems 25

3.1 Risk management 253.1.1 Ethics guidelines and conflict of interest policy 253.1.2 Anti-fraud measures 26

3.2 Compliance and effectiveness of Internal Control Standards (ICS) 26

Part IV Management assurance 27

4.1 Review of the elements supporting assurance 274.2 Reservations 274.3 Overall conclusions on assurance 27


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Part V Declaration of assurance 28

Annex I Core business statistics 29

Annex II Statistics on financial management 31

Annex III Organisational chart (as of 31 December 2018) 39

Annex IV Establishment plan 40

Annex V Human and financial resources by activity 42

Annex VI Final annual accounts 44


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The EBA Board of Supervisors (BoS) takes note of the Consolidated Annual Activity Report 2018,submitted by the Authorising Officer in accordance with Article 47(1) of the Financial Regulationapplicable to the EBA.

Analysing and assessing the Consolidated Annual Activity Report 2018, the BoS has made thefollowing observations.

This report, together with the EBA Annual Report 2018, contains a comprehensive account ofthe activities carried out by the EBA in the implementation of its mandate and Work Programmeduring 2018. The EBA has met its obligations under Article 47(1), providing a detailed accountof the results achieved in relation to the objectives set in the Work Programme for 2018,financial and management information.

The BoS takes note of the reports of the European Court of Auditors and the Internal AuditService, and of the EBA s response to these reports.

The BoS notes that the Executive Director has no reservations or critical issues to report, whichwould affect the presentation of the annual accounts for the financial year 2018 to thedischarge authority.

London, 15 June 2019

José Mauel CampaChair of the Board of Supervisors


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The European Banking Authority (EBA) was established on 1 January 2011 under Regulation (EU)No 1093/20101 of the European Parliament and of the Council of 24 November 2010. The authorityis part of the European System of Financial Supervision (ESFS) and took over all existingresponsibilities and tasks of the Committee of European Banking Supervisors.

The EBA works to ensure effective and consistent prudential regulation and supervision across theEuropean banking sector. Its overall objectives are to maintain financial stability in the EU and tosafeguard the integrity, efficiency and orderly functioning of the banking sector.

The main task of the EBA is to contribute, through the adoption of binding Technical Standards(BTS) and Guidelines, to the creation of the European Single Rulebook in banking. The SingleRulebook aims at providing a single set of harmonised prudential rules for financial institutionsthroughout the EU, helping create a level playing field and providing high protection to depositors,investors and consumers.

The Authority also plays an important role in promoting convergence of supervisory practices toensure a harmonised application of prudential rules. Finally, the EBA is mandated to assess risksand vulnerabilities in the EU banking sector through, in particular, regular risk assessment reportsand pan-European stress tests.

Other tasks set out in the EBA s mandate include:

investigating alleged incorrect or insufficient application of EU law by national authorities,taking decisions directed at individual competent authorities or financial institutions inemergency situations,mediating to resolve disagreements between competent authorities in cross-border situations,acting as an independent advisory body to the European Parliament, the Council or theCommission,taking a leading role in promoting transparency, simplicity and fairness in the market forconsumer financial products or services across the internal market.

To perform these tasks, the EBA can produce a number of regulatory and non-regulatorydocuments including binding Technical Standards, Guidelines, Recommendations, Opinions and ad-hoc or regular reports.

The Binding Technical Standards are legal acts that specify particular aspects of an EU legislativetext (Directive or Regulation) and aim at ensuring consistent harmonisation in specific areas. TheEBA develops draft BTS which are finally endorsed and adopted by the European Commission.Contrary to other documents such as Guidelines or Recommendations, the BTS are legally bindingand directly applicable in all Member States.


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The EU Banking environment is a quickly evolving landscape and the EBA has kept up themomentum to complete the reform package endorsed by the G20 Leaders, according to the agreedtimeline whilst aiming at the maximum possible level of consistency at the international level and,especially, within the EU Single Market.

The EBA also needed a strategic refocusing in order to sharpen its perspective on the EU SingleMarket and its role as part of the Banking Union.

In 2018, three key drivers were identified to lead theorganisation to a more mature stage: i) developing a meaningful agenda for convergence insupervisory and resolution practices, ii) reviewing the impact of regulatory reforms on bankingmarkets via a strengthened analytical function, and iii) deepening our policy role in financialinnovation.

the EBA developed seven strategic areas for 2018-2020:

To play a central role in the regulation and policy framework with the development andmaintenance of the Single Rulebook;

To strengthen its role as the EU data hub for the collection, dissemination and analysis of dataon EU banks

To promote efficient and coordinated crisis management of credit institutions, investmentfirms and financial market infrastructures in the EU

To promote the convergence of supervisory practices to a high standard so as to ensure thatregulatory and supervisory rules for going concern and crisis situations are implementedconsistently across the EU

To identify and analyse trends, potential risks and vulnerabilities and support efforts toresolve non-performing loans

To protect consumers, monitor financial innovation and contribute to efficient, secure andeasy retail payments in the EU

To be a responsible, competent and professional organisation, with effective corporategovernance and efficient processes


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These strategic areas are developed through 382 activities, and each activity, in turn, contains a listof main deliverables to be submitted in 2018. The 2018 Annual Report mirrors the key objectivesset out in the 2018 Work Programme.

2 Of these activities, 30 are related to core business. The achievements in core business activities are described in Part Iof this report and the operational activities are covered in the subsequent parts of this document.

0 5 10 15 20 25 30

Guidelines

Implementing Technical Standards

Regulatory Technical Standards

Opinion/Advice

Published Reports

Recommendation

BUL investigation

Mediation

Peer review

Warning

Stress test

Trainning to Competent Authorities

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10

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Overview of regulatory products delivered against the workprogramme

Delivered Delayed


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The following tables display the EBA achievements and products delivered in 2018. The activitiesrefer to the core business activities only as described in the EBA 2018 Work Programme.3

Activity 1: Capital

Main outputsUpdate on Report on monitoring AT1 instruments 2018Update on list of CET1 instruments and Report on monitoring CET1 instruments2018

Activity 2: Internal governance, remuneration and anti-money laundering

Main outputs Report on the Remuneration Benchmarking Exercise and high earnersOpinion on the use of innovative solutions in the customer due diligence process

Delivered Q12019

Revision of CEBS guidelines on outsourcing of credit institutions' businessactivities

Activity 3: Liquidity risk

Main outputs EBA Report on liquidity measuresUpdate on list of credit institutions waived from 75 percent inflow cap

Delivered Q12019

ITS amending Commission Implementing Regulation (ITS on supervisoryreporting) with regard to the Liquidity Coverage Ratio (LCR)

Activity 6: Accounting, audit and scope of consolidation

Main outputs 9 by EU InstitutionsGuidelines on disclosure of requirements on IFRS 9 transitional arrangementsRTS on prudential consolidation methods

Activity 8: Credit risk and credit risk modelling

Main outputs

RTS specifying the nature, severity and duration of an economic downturnaccording to which institutions shall estimate the downturn loss given default(LGD)Assessment to the European Commission's call for advice on the EuropeanSecured Notes (ESNs)Report on review of Credit Risk Mitigation (CRM) framework

Activity 9: Market risk

Main outputs

Amendment RTS on risk mitigation techniques for OTC derivatives not clearedby a central counterparty (CCP)ITS on Prudent Valuation ReportingReport on 2016 CVA risk monitoring exercise

3 https://eba.europa.eu/documents/10180/1981573/EBA+2018+Work+Programme.pdf


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Activity 10: Market infrastructure

Main outputs Report on the amendments to the EMIR clearing obligation under thesecuritisations regulation

Activity 11: Securitisation and covered bonds

Main outputs

RTS on homogeneous underlying exposuresRTS specifying the requirements for originators, sponsors and original lendersrelated to risk retentionGuidelines on the STS criteria for non-ABCP securitisation

Delayed 2019

RTS on conservative method for measuring the amount of the undrawn portionof cash facilitiesRTS on calculation of KIRB in accordance with top-down approach and use ofproxy data

Activity 14: Resolution oversight and convergence

Main outputs Annual report on resolution collegesReview ITS on Procedures; minimum forms & templates resolution plans

Activity 15: Deposit Guarantee Schemes

Main outputs Report to review the GL on Calculation of contributions to DGSs

Activity 16: Functioning of supervisory colleges

Main outputs Annual assessment on functioning of colleges 2017

Activity 18: Supervisory convergence

Main outputs

Revised guidelines on SREPGuidelines on the management of interest rate risk arising from non-tradingbook activitiesGuidelines on Technical aspects of the management of interest rate risk arisingfrom non-trading activitiesReport on the survey of branch authorisation and supervision regimes

Activity 19: Recovery planning and early intervention

Main outputs Joint Opinion on debt retail holders

Activity 20: Third countries equivalence assessment

Main outputs EBA opinion on regulatory equivalence of 3rd countries 2018Recommendation on the equivalence of third country confidentiality regimes


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Activity 22: Risk infrastructure tools, transparency and supervisory reporting

Main outputs ITS on Supervisory reporting 2018ITS on Supervisory Disclosure

Activity 23: Regular assessment for identifying and addressing risks and vulnerabilities

Main outputs

GuidelinesEU-wide stress testing exercise 2018JC Spring Risk Report update 2018JC Autumn Risk Report update 20182018 Report on funding plansOpinion on macro-prudential measures of BEOpinion on macro-prudential measures of HCSF

Activity 24: Thematic assessments and analyses

Main outputs

Call for advice: NPLs on prudential backstopsGuidelines on management of non-performing and forborne exposuresGuidelines on disclosure of non-performing and forborne exposureAsset Encumbrance Report 2018Report on banks' status of Basel III implementation 2018

Activity 26: Protecting consumers

Main outputs EBA Financial education report 2017/18JC Final report on automation in financial advice (2018)

Activity 27: Monitoring financial innovation

Main outputs Report on Big DataUpdated warning on virtual currencies

Activity 28: Contributing to secure, efficient and easy retail payments in the EU

Main outputs

Joint Committee Guidelines on complaints-handlingReport on Guidelines on fraud reportingGuidelines on the conditions to benefit from an exemption from thecontingency mechanismOpinion on the use of eIDAS certificates under the RTS on SCA and CSCOpinion on implementation aspects of the RTS on SCA&CSCRTS specifying the cooperation and exchange of information - Supervision

Activity 29: Fintech

Main outputs

The EBA FinTech RoadmapReport on prudential risks and opportunities arising for institutions from FinTechReport on the impact of Fintech on incumbent credit institutions' businessmodels

Activity 30: Impact of the UK leaving the EU

Main outputs EBA Opinion to hasten financial institutions preparations for Brexit


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Activity 32: Policy analysis & coordination processes

Main outputs Peer Review on Passporting Notifications

Activity 33: Communications processes

Main outputs Annual report 2017

Activity 36: Legal processes

Main outputs1 BUL1 Mediation2 Recommendations


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2.1 Management Board

In accordance with the EBA Founding Regulation, the Management Board ensures that the EBAcarries out its mission and performs the tasks assigned to it. It is composed of the EBA Chairpersonand six other members of the Board of Supervisors elected by and from its voting members. TheExecutive Director, the EBA Alternate Chairperson and a representative of the Commission alsoparticipate in its meetings.

Two new members, representing the German and the Spanish competent authorities, joined theManagement Board in 2018. At the end of December 2018, the Management Board was composedof four members from participating SSM Member States (France, Germany, Italy and Spain) andtwo members from non-participating SSM Member States (Denmark and Sweden). The Board ofSupervisors considered this representation balanced and proportionate as well as reflecting theUnion as a whole.

The Management Board met five times in 2018.To guarantee the transparency of its decision-

2.1.1 Management Board composition as of 31 December 2018

Country Institution Name

Denmark Finanstilsynet Jesper BergFrance Autorité de Contrôle Prudentiel et de Résolution Édouard Fernández-BolloGermany BaFin Raimund RoeselerItaly Banca d Italia Luigi Federico SignoriniSpain Banco de España Jesús Saurina SalasSweden Finansinspektionen Martin Noréus

European Commission Olivier GuersentEuropean Banking Authority Jo Swyngedouw


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2.1.2 Board of Supervisors composition by end of 2018

Voting members

Country Institution Type ofmembership Name

Austria ÖsterreichischeFinanzmarktaufsicht

Head Helmut EttlAlternate Michael Hysek

Belgium Nationale Bank van België/BanqueNationale de Belgique

Head Jo SwyngedouwAlternate David Guillaume

Bulgaria Bulgarian National BankHead Dimitar KostovAlternate Stoyan Manolov

Croatia Hrvatska Narodna BankaHead Martina DrvarAlternate

Cyprus Central Bank of CyprusHead Stelios GeorgakisAlternate Elena Gregoriadou

Czech RepublicHead Zuzana SilberováAlternate Marcela Gronychová

Denmark FinanstilsynetHead Jesper BergAlternate Carsten Kjær Joensen

Estonia FinantsinspektsioonHead Andres KurgpõldAlternate Kilvar Kessler

Finland FinanssivalvontaHead Anneli TuominenAlternate Jyri Helenius

France Autorité de Contrôle Prudentiel etde Résolution

Head Édouard Fernández-BolloAlternate Frédéric Visnovsky

Germany Bundesanstalt fürFinanzdienstleistungsaufsicht

Head Raimund RoeselerAlternate Peter Lutz

Greece Bank of GreeceHead Spyridoula PapagiannidouAlternate Kyriaki Flesiopoulou

Hungary Magyar Nemzeti BankHead Csaba KandrácsAlternate Gábor Gyura

Ireland Central Bank of IrelandHead Ed SibleyAlternate Gerry Cross

Italy Banca d ItaliaHead Luigi Federico SignoriniAlternate Andrea Pilati

LatviaHeadAlternate Ludmila Vojevoda

Lithuania Lietuvos BankasHead Vytautas ValvonisAlternate Renata Bagdoniene

Luxembourg Commission de Surveillance duSecteur Financier

Head Christiane CampillAlternate Martine Wagner

Malta Malta Financial Services AuthorityHead Marianne SciclunaAlternate Ray Vella

Netherlands De Nederlandsche BankHead Maarten GeldermanAlternate Sandra Wesseling


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Poland Komisja Nadzoru FinansowegoHead Mateusz MokrogulskiAlternate Mariusz Hajduk

Portugal Banco de PortugalHead Elisa FerreiraAlternate Pedro Duarte Neves

RomaniaHead Nicolae CintezaAlternate Adrian Cosmescu

Slovakia Národná Banka SlovenskaHeadAlternate Tatiana Dubinová

Slovenia Banka SlovenijeHeadAlternate

Spain Banco de EspañaHead Jesús Saurina SalasAlternate Alberto Ríos Blanco

Sweden FinansinspektionenHead Martin NoréusAlternate Björn Bargholtz

UK Bank of England s PrudentialRegulation Authority

Head Sam WoodsAlternate Charlotte Gerken

EEA EFTA members

Country Institution Type ofmembership Name

Iceland FjármálaeftirlitiðMember Jon Thor SturlusonAlternate Finnur Sveinbjörnsson

Liechtenstein FinanzmarktaufsichtLiechtenstein (FMA)

Member Patrick BontAlternate Markus Meier

Norway FinanstilsynetMember Morten BaltzersenAlternate Ann Viljugrein

EFTA Surveillance AuthorityMember Frank BüchelAlternate Gunnar Thor Pétursson

Observers

Institution Name

SRB Dominique Laboureix

Other non-voting members

Institution Name

ESMA Verena Ross

EIOPA Fausto Parente

ECB Fátima Pires, Carmelo Salleo

ECB Supervisory Board Korbinian Ibel


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Institution Name

European Commission Martin Merlin, Dominique Thienpont

ESRB Francesco Mazzaferro

2.2 Major developments

The EBA has undergone a major reorganisation in 2018, which was the direct consequence of thereview of the European Supervisory Agencies. The reorganisation addressed three main issues: (i)

s on supervision and resolution; (ii) the need to define more clearlypriorities for the Authority; and (iii) ways to foster a common culture and teamwork. The processre-defined the tasks of existing departments, some existing units, and created some new units withclearly defined tasks and centralized roles in the respective area of competence. Because of thereorganisation, two out of three existing Directorates were renamed and acquired new units, a newDirectorate was created, as well as six new units.

In 2018 the EBA continued closely following Brexit-related developments to understand thepotential risks and has issued its second Opinion to draw these risks to the attention of financialinstitutions and supervisors and to highlight the need for financial institutions to put in placeappropriate mitigating measures. The Opinion the EBA also outlined specific areas of concern (orrisk channels) that financial institutions should duly consider in their contingency planning. Theseinclude: access to financial market infrastructure; ability to perform contractual obligations underthe existing contracts, including performance of ancillary services or actions; access to fundingmarket access; transfer and storage of personal data; use of UK law in issuances of MREL eligibleinstruments - all without relying on possible public sector solutions.

The EBA is not involved in the political negotiations, but instead focuses on potential risks, including

across the organisation, as Brexit touches on many different topics.

In 2018 the EBA has also been active in the preparations for the post-Brexit cooperationarrangements, where our focus is three-fold (1) cooperation between supervisors, (2) betweenresolution authorities and (3) cooperation between the EBA (as authority) and the UK authorities.In all of three areas we have been developing memoranda of understanding (MoUs) with theobjective to have these MoUs in place sufficiently in time.

In June 2018 the EBA has finalised the procurement for the selection of the office space in Paris.The EBA will occupy four floors of the Tour Europlaza building located in the financial district ofParis, La Defense.

2.3 Budgetary and financial management

The EBA budget execution in 2018 was 99.85 %. This reflects both the ongoing improvement inbudgetary management within the EBA and the clear need for the increasing amending budgetgranted in October 2018.


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The EBA processed 57 internal budget transfers in 2018, moving net EUR 127 189 from Title I toTitle III and EUR 11 216 from Title II to Title III. This larger than normal volume of transfers wasdriven largely by the timing of the amending budget, with funds being transferred temporarily frombudget lines prior to the amending budget then subsequently returned after approval of theamending budget. Management Board approval was obtained for the transfers above 10 % for thebulk transfers processed following the amending budget.

Carry forward to 2019 of 11.6 % is an increase of 2.6 % on the previous year. This was driven byone-off commitments related to the Paris office space.

Regarding financial management, of the 1 515 payments made by the EBA in 2018, just 12 invoices(0.8 %) were paid late. For the fifth year in a row the EBA paid zero late payment interest.

Annex II contains detailed tables of statistics on financial management.

2.4 Human resources (HR) management

The EBA 2018 Establishment Plan (EP) had foreseen 145 temporary agent (TA) posts. In addition,42 contract agent (CA) posts and 16 seconded national experts (SNE) posts were authorised underthe EU budget.

The geographical and gender balance of the EBA staff (TA, CA and SNE) remain the same as in 2017;EBA employs staff of 28 nationalities, of which 47% females and 53% males.

The EBA employs 6 senior managers and 14 middle managers, who represent 10% of the total staff.

The number of days of annual leave taken in 2018 went down to 23.76 days. This is on average 3.15annual leave days less than in 2017.

The total number of annual leave days carried over from 2018 to 2019 is approximately 1,781 days.An average of 9.37 days per staff member was carried over.

In 2018, a total of 1,571 days of special leave (inclusive of parental and unpaid leave) were taken.On average, 8.27 days per staff member were taken, which is quite a noticeable decrease from11.14 days in 2017 due to slightly shorter instances of unpaid leave in 2018.

The average number of sick leave days per staff member in 2018 decreased to 6.34 days (6.81 daysin 2017). The sick leave calculation does not include a full-year invalidity of a staff member in 2018.A total of 1,205.5 days of sick leave were taken (not including absences for medical appointments).A medical certificate was provided for 698 (58%) days and 507.5 (42%) days were administered assick leave without certificate . The total absence due to sickness (with or without certificate) in

2018 represented approximately 4.9 full-time equivalents (FTE) and is thus slightly lower than in2017 (5FTE).

In 2018, EBA staff continued to benefit from to the flexitime regime. On average, 8.08 flexi leavedays were taken by a staff member in 2018.


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The total staff turnover on 31 December 2018 based on total staff figure of 190 (TAs, CAs, and SNEsincluded) represents 12.1% turnover rate due to resignation, non-renewal or contract expiry. Eventhough the overall turnover has increased compared to previous years (8.4% in 2017), the turnoverof temporary agents (5.1% of the total of 138 TA) went down (8.1% in 2017).

The sixth reclassification exercise started on September 2018 and concluded on 16 October 2018.In total, 82 staff members (66 temporary agents and 16 contract agents) were eligible forreclassification in 2018, of which 29 (43%) TAs and 10 (62%) CAs were reclassified in 2018. The EBAdid not go above the multiplication rates as indicated in Annex I to the Staff Regulation in its 2018reclassification exercise.

In 2018, the EBA contributed to the schooling of 42 children of its staff by paying the school feesdirectly to the schools up to the thresholds approved by decisions of the Management Board. Forthe school year 2018/2019, the thresholds increased to £114,210 for the primary and £18,420 forthe secondary education levels. Amounts exceeding these thresholds were borne by the staffmembers.

The EBA managed to conclude agreements with further five schools in London or Greater London,bringing the total number of schools with signed agreements to 33 in 2018.

The EBA also contributed to the costs of nursery and pre-education establishments for 18 children.The monthly threshold of the nursery contribution was set at £1,300/month for the school year2017/2018 by the decision of the Management Board.

EBA engaged in total 11 trainees in 2018, of which two continued their traineeships from 2017 andnine joined the EBA in 2018.

During the implementation of the training plan 2017 (1 April 2017 31 March 2018), in total 511participants attended various training courses organised in-house or outside the EBA. The totalnumber of training days provided was 770 days. The average number of training days provided was4.3 training days/staff member.

Following the assessment of training needs for 2018, identified in the performance appraisalcovering the period January December 2017, a Training plan for 2018 was developed and approvedby the Executive Director on 27 June 2018.

The EBA continued to support training of shared interest, continued to implement coachingprogramme for managers, provided access to in-house French language training to its staff andcontributed to the language training of its staff organised on private basis.

The work on analysis and adoption of implementing rules continued in 2018. The ManagementBoard of the EBA at its meeting on 5 June 2018 decided to request the agreement of the EuropeanCommission to the non-application of the Commission Decision C(2017) 6760 final on the generalimplementing provisions for implementing Article 79 (2) of the COES, governing the conditions of


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employment of contract staff employed by the Commission under the terms of Articles 3a and 3bthereof.

The following model decisions have been adopted by the MB in 2018:

Decision of the Management Board on the implementation of telework in the EBADecision of the Management Board concerning the function of adviserDecision of the Management Board on MM staffDecision of the Management Board on temporary occupation of managementposts

2.5 Assessment by management

2.5.1 Overall budget implementation rate

The initial budget for the year was EUR 39 875 000. This was increased in October 2018 byEUR 2 709 409 through an amending budget. The target of 95% for implementation of the budgetwas achieved: the 2018 budget execution rate was 99.85%.

The amending budget wasfor the relocation of the EBA to Paris, due to the timings of that decision and that of the annualbudgetary procedure.

2.5.2 Legality and regularity

Ex-ante verification was performed on each of the 1 965 payment transactions processed by theEBA . In addition, three ex-post control exercises wererun during the year, on 88 transactions representing EUR 1 697 741 by payment value. Overall, theverified transactions were in all material aspects legal and regular.

2.5.3 Validation of the accounting system

The EBA uses the accounting systems provided by the European Commission. In December 2012,those systems were validated by the accounting officer in compliance with Article 50.1(e) of theEBA Financial Regulation, on the basis of work carried out by an independent accounting firmcovering both the systems and the financial circuits. Two changes introduced in 2014 to the workingof the systems have been tested before they were implemented and do not call into question thevalidation of the accounting systems. No additional change was introduced since then.

In addition and in line with best practices, in March 2018 the accounting officer validated thesystem again. This validation was based on a review by an independent accounting firm of theaccounting system, procedures and financial circuit, including a sample of 2017 transactions.


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2.5.4 Procurement procedures

In 2018, the EBA ran four procurement procedure above the directive threshold, resulting in threecontracts being awarded including the lease contract on the Paris premises. The fourth procedureis being relaunched in 2019. The EBA also concluded 12 negotiated procedures above EUR 15 000.In addition, the EBA joined inter-institutional procurements with Commission DGs and with otheragencies. In accordance with the requirement of the procurement directive, before October 2018the EBA implemented electronic submission of tenders for open procedures, for which we are usingthe eSubmission component of the Commissions TED system.

2.6 Budget implementation tasks entrusted to other services andentities

Not applicable.

2.7 Assessment of audit results during the reporting year

2.7.1 Internal Audit Service (IAS)

The Internal Audit Services of the European Commission (IAS) ran an in-depth risk assessmentof the EBA in 2016, which resulted into a Strategic Internal Audit Plan (SIAP) covering the period2017-2019. This plan is reviewed annually, in order to assess the relevance and the level ofpriority of the audit topics that have been identified in the Plan and are not yet implemented.

Following the Strategic Internal Audit Plan the IAS performed in 2018 a comprehensive auditon Single Rulebook Questions & Answers. The objective of the audit was to assess theefficiency and effectiveness of the management controls put in place by EBA with regard to itsmandate, role, responsibilities and tasks when operating the Single Rulebook Q&A functions.

2.7.2 Internal Audit Capability (IAC)

Not applicable.

2.7.3 European Court of Auditors (ECA)

On 22 May 2019, the European Court of Auditors (ECA) transmitted their preliminary observationson the 2018 annual accounts to the EBA.

The ECA opinion on the 2018 accounts was that they presented fairly, in all material respects, the

were legal and regular in all material aspects. The Court included in the report three observationson sound financial management and on performance, and one observation on internal controls,


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2.8 Follow-up of recommendations and action plans for audits

2.8.1 Internal Audit Service (IAS)

During 2018, no critical recommendations were issued or closed and on 1 January 2019, there wasno open critical recommendations.

IAS recommendation status (as the beginning of February 2019)

IAS Audit on Supervisory Convergence Colleges and Training

Documentation ofprocedures related to thesupervisory colleges

Important Open

Deadline: June 2018

On 8 January 2019, EBA provided IAS withsupporting documents and requestedclosure of the recommendation.

Explanation of the changesin the grouping of colleges Important Open

Deadline: March 2018 and June 2018

On 8 January 2019, EBA provided IAS withsupporting documents and requestedclosure of the recommendation.

Performance reporting andindicators for the collegesand supervisory training

Important Open

Deadline: February 2018 and June 2018

On 8 January 2019, EBA provided IAS withsupporting documents and requestedclose of the recommendation.

Documentation ofprocedures for supervisorytraining and inclusion ofresources assigned totraining in activity basedbudgeting

Important Open

Deadline: June 2018

On 30 January 2019, EBA provided IASwith supporting documents andrequested close of the recommendation.

IAS Audit on the Single Rulebook Questions & Answers

Reducing the backlog ofopen Q&A onSupervisory Reporting andexpanding thereporting on all Q&A

VeryImportant Open Deadline: June 2019

Action plan to reduce theadministrative workloadrelated to the Q&A process

Important Open


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Deadline: June 2019

Updating the internalprocess description on theQ&A process Important Open Deadline: June 2019

2.8.2 Internal Audit Capability (IAC)

Not applicable.

2.8.3 European Court of Auditors (ECA)

In their report on the 2017 financial statements, the Court of Auditors made three observations:

1. That the EBA may not be achieving the most economically advantageous solution in itsopen procurement procedures.The EBA does not agree with this comment and continues to strive to ensure that weachieve good levels of competition in our procurement procedures;

2. That the EBA has not been publishing vacancy notices on the EPSO website.The EBA sees a very healthy level of interest in its recruitment procedures. In order toensure transparency of its recruitment and publicity of the EBA vacancy notices, the EBAuses EU-wide communication channels and publishes its vacancy notices in EU-wide tools(EuroBrussels, EurActiv, EU Training) and the networks (EU Agencies Network, the Networkof Members and Observers, Human Resources Conference Heads of HR of the ESCBnetwork). The EBA also publishes vacancy notices in social media (Twitter and LinkedIn).

3. That the EBA has introduced e-invoicing and e-tendering but not e-submission.The EBA introduced eSubmission in mid-2018 and has used it for all open procedurespublished since then.

2.9 Follow-up of observations from the discharge authority

On the 18 April 2018, the discharge authority granted discharge to the EBA Executive Director in2016 and approved

the closure of the 2016 accounts.[1] The adopted text of the 2016 discharge resolution included 33paragraphs of observations, the majority of which were either positive notes or acknowledgements.

The discharge authority welcomed in particular:

[1] http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A8-2017-0079+0+DOC+PDF+V0//EN


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1. The reduction of the overall rate of committed appropriations carried over from 10% in2015 to 8% in 2016, its lowest level ever in the context of a 9% increase in total budgetbetween the two years;

2. That, from the 1 164 invoices paid by the Authority in 2016, only 13 (0.9 %) were paid late,and, for the third year in a row, the Authority paid zero late payment interest;

3. The declarations of interests and the CVs of members of the board of supervisors andmanagement board, as well as of the Authorit

4. The introduction of a public meeting register, which serves the purpose of enhancing the

website;

5. The successful development of the single rulebook for banking in the Union, by producing12 guidelines, 7 final draft implementing technical standards and 15 final draft regulatorytechnical standards;

6. The successful monitoring of various aspects of the single rulebook, including AdditionalTier 1 instruments of own funds, remuneration practices and significant risk transfers insecuritizations;

7. The significant progress in ensuring consistency of supervisory reviews, evaluations andsupervisory measures across Member States, where its report on supervisory convergence,highlighted progress in the convergence of risk assessment practices following the

and the establishment and operation of the Single Supervisory Mechanism;

8. The closure by the IAS of remaining recommendations from 2013 audit;

9. l of disclosure of information on meetings of its staff with stakeholders,which is the most appropriate of the three ESAs.

The discharge authority expressed particular satisfaction with:

1. The level and nature of budget transfers in the year 2016 remaining within the limits of thefinancial rules;

2. The well-balanced nature of the breakdown of staff by gender;

3.

4. lines and anti-fraud strategy;


23

5. The engagement in various activities to lower the environmental footprint;

6. The fact that the Commission is keeping the Authority updated on the developmentswhich affect the

Authority; observes that the functioning of the Authority must be ensured during thetransition period;

Discharge authority observations requiring action include in particular calls for:

1. med a full risk assessment of allprocesses of the Authority (administrative, financial, operational and IT) to serve as a basisfor the preparation of the new Strategic Internal Audit Plan covering the period 2017 2019;notes moreover that in November 2016, the first audit on Supervisory ConvergenceColleges and training took place; calls on the Authority to report to the discharge authorityon the outcomes of these audits;

2. The establishment of an independent disclosure, advice and referral body with sufficientbudgetary resources, in order to help whistleblowers use the right channels to disclosetheir information on possible irregularities affecting the financial interests of the Union,while protecting their confidentiality and offering needed support and advice;

3. While making sure that all assignments resulting from the regulatory framework laid downby Parliament and the Council are carried out in full and within deadline, the Authorityshould carefully adhere to the tasks, should not go beyond the mandate assigned to it byParliament and the Council and should pay particular attention to the principle ofproportionality, so as to optimise the use of resources and to achieve the objectivesmandated to it by Parliament and the Council

4. The resources made available to the Authority should be used in accordance with clearpriorities and with a clear focus on the mandate in order to achieve the desired objectives

effort to effectively, transparently and credibly make use of its resources;

5. The Authority should provide Parliament and the Council with up-to-date andcomprehensive information about its work on a regular basis, in particular in connectionwith the establishment of binding technical standards, opinions and rules, in order toexhibit transparency to Union citizens and to demonstrate its priority to protect consumers;

Discharge authority observations the Agency will take note of:

1. -based

that, in view of the decision on its future location, the Authority has disclosed as contingentliabilities in its financial statements the residual EUR 14 000 000 cost related to the officelease contract (assuming its cancellation by the end of 2020) and the fact that other


24

potential costs associated with relocation, such as the relocation of staff together with theirfamilies, cannot yet be estimated; notes furthermore that a future decrease in the

Union is possible; calls on the Authority to report to the discharge authority on the costs ofthe relocation;

2.

internally; regards it as essential that the Authority have sufficient resources to carry outits assignments in full, including dealing with any additional workload necessitated by thoseassignments, whilst ensuring an appropriate level of prioritisation as regards resourceallocation and budgetary efficiency; in addition, points out that any increase in the

resources or manpower, provided that such reallocation does not impair the full exercise

performance of its supervisory tasks;

The EBA will implement corrective actions to address these points in the course of 2019.


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3.1 Risk management

In order to ensure identification and evaluation of potential risks that could negatively influencethe achievement of EBA s objectives each year, the EBA conducts an assessment exercise to identifyand follow up on risks, their exposure and mitigation measures. The results are being categorisedaccordingly to their significance.

The highest risks for the Agency were considered to be the ones relating to ITS data security andenforcing controls in areas of responsibilities.

Mitigating actions were developed for all identified risks.

3.1.1 Ethics guidelines and conflict of interest policy

The EBA has in place ethics guidelines that aim to ensure that its staff acts with independence,impartiality, objectivity, loyalty and in a transparent way. The guidelines give effect to the StaffRegulations applicable to staff working for the EU civil service and follow closely the EuropeanCommission s guidelines, although taking into account specific situations that EBA staff can face inareas in which the EBA operates. For instance, the ethics guidelines impose strict rules on dealingsin financial instruments, as well as setting out robust guidelines on gifts and hospitality. The EBAmaintains a public meeting register on its public website. This register serves the purpose ofenhancing the transparency of EBA s activities by reporting the meetings that EBA staff have withexternal stakeholders.

Furthermore, the EBA has in place a conflict of interest policy for staff, as well as a specific policyapplicable to members of the Board of Supervisors and Management Board. Both policies requirethat their addressees submit an annual declaration of interests, where they need to declare anyinterest that creates a conflict with respect to all activities falling under the EBA s scope of actionand conducted during the preceding two years, in the case of members of the Board of Supervisorsand Management Board, and five years in the case of EBA staff. To guarantee the transparency ofthe way the EBA operates, the declarations of interests of members of the Board of Supervisorsand Management Board, as well as of the EBA s Chairperson, Executive Director and Directors, arepublished on the EBA s website. Moreover, both policies impose an obligation to declare a situationof conflict of interests not covered by the annual declarations, which in the case of members of theBoard of Supervisors and Management Board also include those in the context of meetings.


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3.1.2 Anti-fraud measures

The EBA is committed to taking strong measures to prevent, address and mitigate any fraud,corruption and other illegal activity affecting the financial interests of the European Union, inaccordance with the Anti-Fraud Strategy for the period 2015 2017. The Anti-Fraud Team appointedby the Executive Director has kept coordinating the implementation of the strategy and its relatedimplementation plan. More specifically in 2018:

The Whistleblowing Policy has been adopted, which aims at encouraging staff to reportconcerns by providing assurance of protection of their position and replaced the precious policyadopted by EBA in 2017.A risk assessment exercise toidentify all fraud risks and estimate how frequent and how severe risk events in these areascould be. The assessment will be completed in Q1/2019.Mandatory training sessions have been provided to all staff members in order to raiseawareness and accountability amongst staff.

3.2 Compliance and effectiveness of Internal Control Standards(ICS)

s Internal Control Standards (ICS) are based on the ICS of the European Commission. They areapproved by the Management Board and implemented within the organisation by the ExecutiveDirector through the adoption of detailed implementing rules and related procedures.

In January 2019, the Management Board adopted the Revised Internal Control Framework, whichis in line with the model of the European Commission and the Committee of SponsoringOrganisations (COSO)4. The revised framework entered into force on the day following its adoption.

4 https://www.coso.org/Pagesw/aboutus.aspx


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4.1 Review of the elements supporting assurance

The building blocks of assurance that are normally in place and were available to the ExecutiveDirector in 2018 are outlined below:

Audits:audit on Single Rulebook Questions and Answers and the Court of Auditors conducted aregular audit on financial Accounts.

Monitoring and reporting: this includes, for example, regular administrative and operationalreports to the Management Board, internal monthly reporting as well as regular ex-post controlexercises on selected sample of transactions.

Certification of the Agency s year-end accounts by the Accounting Officer: the AccountingOfficer s certification of the provisional accounts by 1 March 2019 provided reasonableassurance to the Executive Director that the accounts present a true and fair view of thefinancial situation of the Agency.

Internal Controlsinternal control systems, which was attested by the Internal Audit Services. The currentinternal control framework of the EBA is designed to provide reasonable assurance regardingthe achievement of five objectives set in Article 30(2) of the Financial Regulation: (1)effectiveness, efficiency and economy of operations; (2) reliability of reporting; (3)safeguarding of assets and information; (4) prevention, detection, correction and follow-up offraud and irregularities, and (5) adequate management of the risks relating to the legality andregularity of the underlying transactions. The revised framework supplements the FinancialRegulation and other applicable rules and regulations with a view to aligning EBA standards tothe Commissions standards, which are based on highest international standards set by theCommittee of Sponsoring Organisations of the Treadway Commission (COSO) framework.

4.2 Reservations

Not applicable.

4.3 Overall conclusions on assurance

The Executive Director, in his capacity as Authorising Officer, has signed the Declaration ofAssurance, which accompanies this Consolidated Annual Activity Report.


28

I, the undersigned, Adam Farkas, Executive Director of the European Banking Authority, in mycapacity as authorising officer,

Declare that the information contained in this report gives a true and fair view.5

State that I have reasonable assurance that the resources assigned to the activities described in thisreport have been used for their intended purpose and in accordance with the principle of soundfinancial management, and that the control procedures put in place give the necessary guaranteesconcerning the legality and regularity of the underlying transactions.

This reasonable assurance is based on my own judgment and on the information at my disposalsuch as the results of the ex-ante verifications and ex-post controls performed during the year, orthe reports of the Internal Audit Service and of the European Court of Auditors.

Confirm that I am not aware of anything not reported which could harm the interests of theEuropean Banking Authority.

London, 15 June 2019

Adam Farkas,

Executive Director of the European Banking Authority

5 True and fair view in this context means a reliable, complete and correct picture of the state of affairs.


29

Key performance indicators

Indicator Type Short description Outcome in2018

Number of TechnicalStandards (TS) andGuidelines deliveredand recommendationspublished

Output Quantity of TS and Guidelines delivered andrecommendations published. 20

Number of reports andopinions delivered andwarnings issued

OutputQuantity of reports and opinions delivered andwarnings issued. For warnings, a target cannotbe set.

19

Percentage of the workprogramme smandated tasksdelivered on time

Output Timeliness of the mandated TS, Guidelines andopinions delivered. 80 %

Composite indicator ofsupervisory andresolution convergence

Impact

The indicator will be computed as a weightedaverage of the outcome of direct thematicassessments (where applicable), peer reviews(e.g. heat map) and successful mediation cases(weights to be calibrated).

82.60%

Percentage ofcompleted yearlyassessments of collegesof the annual EBAreport on supervisorycolleges

Outcome/result

The EBA provides an annual assessment on thefunctioning of colleges and their legaldeliverables in its report on supervisorycolleges. This indicator measures thecompleteness of this annual assessment for theclosely monitored colleges.

100%

Feedback on trainingfrom seminarparticipants

Outcome/result

Measures the satisfaction of the participantswith regard to the quality of the trainings andthe seminars organised by the EBA.

90.3 %

Data processing Outcome/result

Timely delivery of new Risk Indicators to theESRB Timely means first submission to theESRB 2 days after the remittance date from theCAs to the EBA (up to 3 days delay on thesubmission = Good ; between 4 to 10 days =Medium ; more than 10 days = Bad ).

0 days delay

Assessment of risks Output Number of risk reports dashboards andthematic studies. 9

Transparency and datadissemination Output

Bank by bank disclosure through ad hoctransparency exercises and regularpublications.

Annualpublication oftransparencydata on the EUbanking sector


30

Indicator Type Short description Outcome in2018

Budget execution(percentage committedof commitmentappropriations)

Input

Measures the level of commitments.a) execution on commitments on the currentyear budget;b) execution on commitments carried forwardfrom previous year s budget.

a) 99.8%b) 96.8%

Number of critical andimportant auditrecommendationsreceived

Output Shows the number of external audit critical andvery important recommendations received. 16

Establishment planachieved (%)

Outcome/result

Measures the fulfilment of the establishmentplan. 98 %

Achievements of thetarget stated in theservice levelagreements (SLAs) ofthe EBA applications

Output Measures the level of the achieved SLA targetsstated in the SLA applications. 100%

Number of visits to theEBA website Impact

Volume of individual visits to the EBA website(i.e. traffic on the EBA website following majordata releases mandated deliverables, etc.).

3,168,632 visits

6 In 2018 one Audit on IAS Audit on Single Rulebook Questions & Answers took place. The report included 3recommendations (No critical, 1 very important, 2 important)


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Revenue

As stipulated by the EBA Founding Regulations, the revenues of the Authority shall consist, inparticular, of:

Obligatory contributions from national public authorities competent for the supervision offinancial institutions;

A subsidy from the European Union;

Any fees paid to the Authority in the cases specified in the relevant instruments of the Unionlaw.

The Financial Regulations also enable the Authority to collect revenue assigned to specific items ofexpenditure (in accordance with Article 23(1) of the FR).

Comparison of 2018 and 2017 revenues (executed budget)

REVENUES 2018 2017

1 REVENUE FROM FEES AND CHARGES

2. EU CONTRIBUTION 16 165 601 14 543 000of which assigned revenues deriving from previous 617 593 152 496

3 THIRD-COUNTRIES CONTRIBUTIONof which EFTAof which Candidate Countries4 OTHER CONTRIBUTIONS 26 418 808 23 876 555of which EFTA NCAs 729 801 659 573of which delegation agreement, ad hoc grants5 ADMINISTRATIVE OPERATIONS* 1 596 018 91 1866 REVENUES FROM SERVICES RENDERED AGAINSTPAYMENT7 CORRECTION OF BUDGETARY IMBALANCESTOTAL REVENUES 44 180 427 38 510 741

The administrative operations revenue includes EUR 1 500 000 contribution received from theFrench Government for the development and lease cost in Paris which will be put towards thefitting out cost of the Paris offices.


32

Expenditure

Budget execution on C1

The EBA had an overall budget execution rate in 2018 of 99.85% for commitments and 88.4% forpayments. This continued high rate of execution results from mature budget planning andmonitoring processes.

In the tables below, the figures in the Budget column show the appropriations amounts after takingaccount of the amending budget and all transfers.

Budget execution C1 in 2018 by title

Title Budget Committed %commit. Paid % paid Carried

Forward % CF

A B C = B / A D E = D / A F G = F / AI: Staff Related 27 603 520 27 563 478 99.9% 27 451 200 99.4% 112 277 0.4%II: Administrative 8 607 484 8 597 369 99.9% 5 687 502 66.1% 2 909 867 33.8%III: Operational 6 373 405 6 358 412 99.8% 4 433 799 69.6% 1 924 613 30.2%TOTAL 42 584 409 42 519 259 99.8% 37 572 502 88.2% 4 946 757 11.6%

Budget execution C1 in 2018 by chapter

ChapterBudget Total commitments Total payments Carry forward

A B C = B/A D E = D/A F G = F/B

11 Staff in active employment 24 911 888 24 911 528 100% 24 911 528 100% - 0%12 Expenditure relating to staffmanagement and recruitment 1 401 024 1 401 024 100% 1 370 761 98% 30 263 2%

13 Mission expenses, traveland incidental expenses 164 717 149 394 91% 147 155 89% 2 239 1%

14 Socio-medical infrastructure 790 504 790 437 100% 774 519 98% 15 917 2%15 Training 285 750 264 911 93% 201 754 71% 63 157 24%17 Representation expenses,receptions and events 49 638 46 185 93% 45 484 92% 701 2%

20 Rental of buildingand associated costs 4 350 639 4 349 059 100% 3 540 843 81% 808 216 19%

21 Information andcommunication technology 3 529 630 3 529 629 100% 1 648 848 47% 1 880 781 53%

22 Movable propertyand associated costs - - - - - - -

23 Current administrative expenditure 187 139 180 625 97% 118 279 63% 62 346 35%24 Postage and telecommunications 198 208 196 208 99% 160 220 81% 35 988 18%25 Information and publishing 341 868 341 847 100% 219 313 64% 122 535 36%26 Meeting expenses - - - - -31 General operational expenditure 2 467 178 2 453 783 99% 1 960 750 79% 493 033 20%32 IT expenses for operational purposes 3 906 227 3 904 630 100% 2 473 049 63% 1 431 580 37%

TOTAL 42 584 409 42 519 259 100% 37 572 502 88% 4 946 757 12%


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Total commitments (C1): 2018 2016

Title 2018 2017 2016

I: Staff-related 27 563 478 24 541 328 24 007 806

II: Administrative 8 597 369 5 970 108 5 795 673III: Operational 6 358 412 6 333 718 5 503 879

TOTAL 42 519 259 36 845 154 35 307 358

Initial and amending budgets

The initial 2018 budget was adopted by the Board of Supervisors on 12 December 2017. Theamending budget, driven by relocation costs, was adopted on 23 October 2018. The tables belowshow the total amounts transferred between budget lines (for expenditure).

Initial and amending budgets 2018 Revenue

Budgetary revenue 2018Initialappropriations

Amendingbudget Transfers Final

appropriations

A B C D = A + B + C

EU subsidy 15 076 978 1 065 600 - 16 142 578National Competent Authority contributions - EUMember States 24 112 994 1 598 400 - 25 711 394

National Competent Authority contributions - ObserverStates 685 028 45 409 - 730 437

TOTAL 39 875 000 2 709 409 - 42 584 409

Initial and amending budgets 2018 Expenditure

Budgetary expenditure 2018Initialappropriations


appropriationsA B C D = A + B + C

Title 1 Staff expenditure 26 874 000 303 009 426 511 27 603 520Salaries & allowances 24 398 000 - 513 888 24 911 888Expenditure relating to staffrecruitment and management 1 308 000 170 700 - 77 677 1 401 024

Mission expenses 40 000 132 309 - 7 592 164 717Socio-medical infrastructure 804 000 - - 13 496 790 504Training 263 000 - 22 750 285 750Receptions and events 61 000 - - 11 362 49 638Title 2 Administrativeexpenditure 5 761 000 2 406 400 440 084 8 607 484

Rental of building and associatedcosts 3 216 000 864 500 270 139 4 350 639

Information and communicationtechnology 1 676 000 1 411 500 442 130 3 529 630

Current administrativeexpenditure 211 000 54 700 - 78 561 187 139


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Budgetary expenditure 2018Initialappropriations


appropriationsA B C D = A + B + C

Postage / Telecommunications 186 000 57 800 - 45 592 198 208Information and publishing 472 000 17 900 - 148 032 341 868Meeting expenses - - - -Title 3 Operational expenditure 7 240 000 - - 866 595 6 373 405General operational expenditure 2 820 000 - - 352 822 2 467 178IT expenses for operationalpurposes 4 420 000 - - 513 773 3 906 227

TOTAL 39 875 000 2 709 409 - 42 584 409

Carry forward to 2019

The value of carry forward into 2019 was EUR 4 946 757 (12%). It comprised of 176 commitments.This is a minor increase on the previous year s value of EUR 3 318 044 (9%), due to the increase incosts related to relocation. The EBA continues to work to reduce the carry-forward while meetingthe needs of EBA activities.

Carry-forward % comparison of 2018 to 2017

Title 2018 2017 Movement

A B C = A - BI: Staff-related 0% 0% 0%II: Administrative 34% 20% 14%III: Operational 30% 33% -3%

TOTAL 12% 9% 3%

Budgetary execution in 2018 on carry-forward from 2017

Budget execution in 2018 (C8) on carry-forward from 2017

Title Carry forward Paid % CancellationA B C = B / A D = B - A

I: Staff Related 55 481 43 379 78.19% 12 103II: Administrative 1 185 166 1 108 024 93.49% 77 142III: Operational 2 077 396 2 061 841 99.25% 15 555TOTAL 3 318 044 3 213 244 96.84% 104 799

Carry forward from 2018 was well managed with a 97% execution rate. One hundred and twentyseven (127) commitments were carried forward from 2017. One de-commitment of EUR 36 220resulted from change in scope of the website migration to a new platform. Second highest de-commitment of EUR 18 996 arose due to late invoicing from one supplier (a UK agency). These twode-commitments combined makes up more than half of de-committed value out of the 127commitments.


35

Budget outturn

Budget outturn for 2018 & 2017

2018 2017

REVENUEEuropean Commission subsidy + 15 548 008 14 390 504Surplus Year 2016 + 617 593 381 239Contributions from National Competent Authorities + 25 689 007 22 994 557Contributions from Observers + 729 801 653 254Contribution from the French Government + 1 500 000Bank interest + 5 365Other income + 90 653 91 186TOTAL REVENUE (a) 44 180 427 38 510 740EXPENDITURE

Title I:StaffPayments - 27 451 200 24 485 847Appropriations carried over - 112 277 55 481Title II: Administrative ExpensesPayments - 5 687 502 4 784 942Appropriations carried over - 4 409 867 1 185 166Title III: Operating ExpenditurePayments - 4 433 799 4 256 321Appropriations carried over - 1 924 613 2 077 396TOTAL EXPENDITURE (b) 44 019 259 36 845 154

OUTTURN FOR THE FINANCIAL YEAR (a-b) 161 168 1 665 586

Cancellation of unused payment appropriations carriedover from previous year + 104 799 76 566

Adjustment for carry-over from the previous year ofappropriations available at 31.12 arising from assignedrevenue

+

Exchange differences for the year (gain +/loss -) +/- - 9 912 81 208

BUDGET RESULT FOR THE FINANCIAL YEAR 256 056 1 823 361


36

Financial management

Financial statistics

Commitment transactions by fund source

Total C1 C8

volume EUR volume EUR volume EUR

Carry-forward 127 3 318 044 - - 127 3 318 044New 460 37 201 297 460 37 201 297 - -Top-up 166 7 094 318 166 7 094 318 - -De-commitment 309 -1 881 156 251 -1 776 357 58 - 104 799TOTAL 1 062 45 732 503 877 42 519 259 185 3 213 244

2017 totals 998 39 718 652 796 36 845 154 202 2 873 498

% change 6.4% 15.1% 10.2% 15.4% -8.4% 11.8%

Payment transactions by fund source

Total C1 C8

volume EUR volume EUR volume EUR

Supplier invoices 1 515 16 568 838 1 296 13 376 905 219 3 191 933Mass payment load 141 23 974 301 131 23 965 585 10 8715.68Other payments 275 242 608 258 230 012 17 12596.03TOTAL 1 931 40 785 746 1 685 37 572 502 246 3 213 2442017 totals 1 822 36 400 608 1 564 33 527 110 258 2 873 498% change 6.0% 12.0% 7.7% 12.1% -4.7% 11.8%

Mass payment load (MPL) is batch processing functionality used for paying staff salaries, SNE andtrainee allowances, and for reimbursement of staff mission and interview candidates expenses.Further detail on MPL is shown in a separate table below.

Other payments include the salary run, miscellaneous staff reimbursements, reimbursement ofexpenses to externals (BSG, BoS members, speakers) and a small number of paymentregularisations.

Supplier invoice statistics

Paymentdeadlines

Number ofpayments

Payments withindeadline % Average

payment timesLatepayments %

days volume volume % days volume %30 1,488 1,477 99% 20.04 11 1%45 26 25 96% 31.38 1 4%60 1 1 100% 29.00 - 0%

TOTAL 1515 1503 99% 20.24 12 1%


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Late payment interest

For the fourth year running, the EBA paid no late payment interest.

Supplier invoice suspensions

Number of payments Suspended payments Average suspension

volume volume % days

All payments 2018 1 515 104 7% 20.24

All payments 2017 1 324 147 11% 20.43

The EBA is measuring suspensions with the aim of reducing the proportion of invoices suspendedso as to reduce the time consumed by these transactions.Improvements in contract management and payment process meant that in 2018, the number ofsuspended payments were significantly decreased to 7% in comparison to the previous year.

Mass payment load statistics 2018

TypeNumber ofbatches

Totalindividualpayments

Average numberof payments perbatch

Total value ofpayments

Average value ofpayments perbatch

volume Volume Volume EUR EUR

Missions claims 105 1 322 13 312 759 2 979SNE payments 13 145 11 886 767 68 213Salary payments 12 2 046 171 22 705 286 1 892 107Trainee payments 11 54 5 69 489 6 317

TOTAL 141 3 567 199 23 974 301 170 031

The use of mass payment load (MPL) for SNE and trainee payments and reimbursement of staffmission expenses has significantly reduced the processing time for these payments: previously eachof the 3 567 transactions making up these batches would have been processed with an individualpayment order.


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Procurement statistics

New framework contracts concluded in 2018: EBA open procedures

Subject Contractor(s) Date signed Ceiling Currency

Catering services and supplies Talkington Bates 11.07.2018 459 770 EUROffice space design & projectmanagement Savills 17.08.2018 400 000 EUR

In 2018, the EBA participated in 55 framework contracts (including lots) lead by other EUinstitutions. The EBA also makes extensive use of service level agreements (SLA) and memorandaof understanding (MoU) with DG HR, DG BUDG, PMO, CdT and the Publications Office of the EU.

The EBA also procured the lease for office space in La Défense in accordance with Article 88 of theEBA financial regulation.

Legal/contractual basis for 2018 commitments (C1)

Legal/contractual basis Commitments Payments

Staff regulations 24,258,405 57 % 24,258,405 65 %EBA FWC 6,920,889 16 % 4,927,577 13 %EC FWC 3,544,959 8 % 1,361,785 4 %Lease 2,990,659 7 % 2,987,151 8 %Decision 2,391,524 6 % 2,270,688 6 %MoU/SLA 1,173,871 3 % 935,027 2 %Direct contract 1,047,232 2 % 686,287 2 %Purchase order 118,938 0 % 91,616 0 %Headquarters agreement 72,783 0 % 53,966 0 %TOTAL 42 519 259 100 % 37,572,502 100 %


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EBA s Establishment Plan 2018

Category andgrade

Establishment plan in EU Budget 2018 Modifications in 2018 in application offlexibility rule7

Officials TA Officials TAAD 16 1AD 15 1AD 14 2AD 13 2AD 12 8AD 11 12AD 10 12AD 9 18AD 8 26 +2AD 7 20 +1AD 6 18AD 5 14Total AD 134 139AST 11 0AST 10 0AST 9 0AST 8 0AST 7 0AST 6 3AST 5 4AST 4 2 -1AST 3 1 -1AST 2 1 -1AST 1 0Total AST 11 6AST/SC 6 0AST/SC5 0AST/SC4 0AST/SC3 0AST/SC2 0AST/SC1 0Total AST/SC 0TOTAL 134 145

7 In line with Article 32 (1) of the framework Financial Regulation, the Management Board may modify, under certainconditions, the establishment plan by in principle up to 10% of posts authorised, unless the financial rules of the bodyconcerned allows for a different % rate.


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Information on the entry level for each type of post: Indicative table

Key functionsType ofcontract

Function group, gradeof recruitment

Department, Deputy Director etc. TA AD 12

L-1

Head of Unit, Head of Business Area TA AD 10

L-2

Head of Sector n/a n/aSenior Specialist, etc. TA AD 8-9

Officer, Specialist TA/CA AST 4/AD 6-7-8

Junior Officer TA AD 5

Senior Assistant CA FG III

Junior Assistant n/a

Head of Administration TA AD 12

Head of Human Resources TA AD 10

Head of Finance TA AD 10

Head of IT TA AD 10

Secretary CA FG III

Mail Clerk n/a

Webmaster Editor CA FG IV

Data Protection Officer TA AD 10

Accounting Officer TA AD 10

Internal Auditor n/a

Secretary to the Director CA FG IV


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Comments

Full-time equivalents (FTE) include Temporary Agents, Contract Agents and Seconded NationalExperts only. Compared to the table published in the annual Work Programme, the costs ofmanagement staff have been reallocated across the relevant activities.

The EUR amount equals the amount committed in 2018, including carry-forward to 2019.

FTE Cost

EBA (Chair, Executive Director, PAs) 2 --

Prudential Regulation and Supervisory Policy (PRSP) [Management and support] 6 -Activity 1: Capital 2 524,281Activity 2: Liquidity risk and interest rate risk in the banking book 1 263,478Activity 3: Leverage ratio 1 261,646Activity 4: Loss absorbency 1 263,207Activity 5: Accounting and audit 2 523,689Activity 6: Large exposures 1 261,646Activity 7: Credit risk 7 1,749,197Activity 8: Market risk 6 1,553,964Activity 9: Operational risk and investment firms 2 519,721Activity 10: Supervisory review 6 1,555,816Activity 11: Internal governance and remuneration 2 525,630Activity 12: Recovery and resolution 5 1,223,349Banking Markets, Innovations and Consumers (BMIC) [Management and support] 5 -Activity 13: Reporting 6 1,507,978Activity 14: Transparency 1 279,007Activity 15: Loans management and valuation 2 871,923Activity 16: Market access, authorisation and equivalence 3 804,132Activity 17: Banking markets, securitisation, covered bonds and sustainable finance 4 1,082,835Activity 18: Innovation and FinTech 4 1,067,804Activity 19: Consumer and depositor protection 5 1,096,814Activity 20: Payment services 4 1,170,821Activity 21: Anti-money laundering and combating the financing of terrorism 2 542,369Economic Analysis and Statistics (EAS) [Management and support] 6 -Activity 22: Risk analysis 4 1,340,758Activity 23: Stress testing 6 1,540,854Activity 24: Data analysis and infrastructure 4 2,171,237Activity 25: Statistical tools 5 1,119,052Activity 26: Ad hoc data collections 5 1,113,038


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Activity 27: Management of the notification process 1 201,059Activity 28: Economic analysis and impact assessment 8 2,203,821Activity 29: Preparing for potential risks around the withdrawal of the UK from the EU 1 275,657Support activities 9 -Activity 30: Policy coordination and communication 9 1,747,226Activity 31: Q&As 6 1,302,128Activity 32: Training for competent authorities 3 466,339Activity 33: Legal services 12 2,734,444Activity 34: Finance, procurement and accounting 7 1,534,999Activity 35: Human resources 5 1,330,583Activity 36: Information technology 14 4,548,291Activity 37: Corporate support 5 1,240,466Total 190 42,519,259


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The EBA s financial performance in 2018

regulation (Commission Delegated Regulation (EU) No 1271/2013 of 30 September 2013 on theframework financial regulation for the bodies referred to in Article 208 of Regulation (EU, Euratom)No 966/2012 of the European Parliament and of the Council).

The accounting rules, methods and guidelines are those adopted and provided by the accountingofficer of the European Commission.

The annual accounts comprise the financial statements and the reports on the implementation ofthe budget.

The reports on the implementation of the budget are shown in Annex II Statistics on financialManagement.

The financial statements comprise the balance sheet, the statement of financial performance, thecash-flow statement and the statement of changes in net assets.

Balance sheet

The balance sheet provides the financial position of the EBA as at 31 December 2018 and 31December 2017.

Balance sheet (amounts in EUR)

31.12.2017 31.12.2016

ASSETSNON-CURRENT ASSETSIntangible fixed assetsComputer software 2,813,819 1,946,853Tangible fixed assetsComputer hardware 179,599 206,349Furniture 241,579 420,107Other fixture and fittings 2,237,183 7,227,137Total 5,472,180 9,800,446CURRENT ASSETSCurrent receivables 883,148 988,907Sundry receivables 73,174 198,526Prepaid expenses 1,133,391 1,648,546


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31.12.2017 31.12.2016Cash and cash equivalents 5,587,528 3,511,280Total 7,677,241 6,347,259TOTAL ASSETS 13,149,421 16,147,705LIABILITIESNON-CURRENT LIABILITIESProvision for risks and charges 8,589,141 6,731,978Deferred revenue - 1,100,051Total 8,589,141 7,832,029CURRENT LIABILITIESProvision for risks and charges 5,973,652 -Current payables 2,500,927 2,519,046Sundry payables 10,893 68,906EU entities 256,056 1,823,361Deferred revenue 3,127,455 4,461,317Total 11,868,983 8,872,630TOTAL LIABILITIES 20,458,124 16,704,659NET ASSETSAccumulated surplus/(deficit) (556,954) 4,365,423Economic outturn for the year profit/(loss) (6,751,749) (4,922,377)TOTAL NET ASSETS (7,308,703) (556,954)

Statements of financial performance

The financial statements below show all income and charges for the financial year based on accrual

Statements of financial performance (amounts in EUR)

2018 2017OPERATING REVENUEContribution from the Member States 24,754,656 22,994,562Contribution from EFTA countries 703,257 653,254EU Subsidy 16,870,440 12,948,382Foreign currency conversion gains 153,536 619,680Other administrative revenue 97,406 205,489TOTAL OPERATING REVENUE 42,579,294 37,421,367OPERATING EXPENSESStaff expenses 25,194,634 26,062,142Building and related expenses 7,011,151 2,135,278Other expenses 10,542,486 10,495,897Depreciation and amortization 6,314,330 3,002,426Foreign currency conversion losses 163,448 538,472TOTAL OPERATING EXPENSES 49,226,049 42,234,215


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2018 2017SURPLUS / (DEFICIT) FROM OPERATING ACTIVITIES (6,646,755) (4,812,848)NON OPERATING REVENUES / (EXPENSES)Financial revenueFinancial expenses 5,365 -SURPLUS / (DEFICIT) FROM NON OPERATING ACTIVITIES (110,359) (109,529)SURPLUS / (DEFICIT) FROM ORDINARY ACTIVITIES (104,994) (109,529)SURPLUS / (DEFICIT) FROM EXTRAORDINARY ITEMSECONOMIC RESULT FOR THE YEAR (6,751,749) (4,922,377)

- -

(6,751,749) (4,922,377)

Cash flow statement (amounts in EUR)

2018 2017CASH FLOW FROM ORDINARY ACTIVITIESSurplus /(deficit) from ordinary activities (6,751,749) (4,922,377)Operating activitiesDepreciation and amortisation 6,314,330 3,002,426Increase/(decrease) in provisions for risks and liabilities 7,830,815 3,934,472(Increase)/decrease in short term receivables 746,266 (1,018,637)Increase/ (decrease) in accounts payable (76,132) 48,704Increase/ (decrease) in liabilities related to consolidated EU Entities (1,567,305) 221,869Increase/(decrease) in deferred income (2,433,913) (1,073,141)Net cash flow from operating activities 4,062,313 193,316CASH FLOW FROM INVESTING ACTIVITIES(Increase)/decrease in tangible and intangible fixed assets (1,986,065) (1,182,324)Net cash flow from investing activities (1,986,065) (1,182,324)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,076,248 (989,008)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 3,511,280 4,500,288CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 5,587,528 3,511,280

Statement of changes in net assets (amounts in EUR)

AccumulatedSurplus

Net surplus/(deficit) forthe period Total Net Assets

Balance as of 31 December 2017 (556,954) (556,954)Economic result of the year (6,751,749) (6,751,749)Balance as of 31 December 2018 (556,954) (6,751,749) (7,308,703)

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