Sittings · Document

DRAFT REPORT (2023/2146(DEC)) 2024-01-16

On discharge in respect of the implementation of the budget of the European Banking Authority for the financial year 2022

Committee on Budgetary Control · Rapporteur: Petri Sarvamaa

PR_DEC_Agencies

1. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on discharge in respect of the implementation of the budget of the European Banking Authority for the financial year 2022

(2023/2146(DEC))

– having regard to the final annual accounts of the European Banking Authority for the financial year 2022,

– having regard to the Court of Auditors’ annual report on EU agencies for the financial year 2022, together with the agencies’ replies,

– having regard to the statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2022, pursuant to Article 287 of the Treaty on the Functioning of the European Union,

– having regard to the Council’s recommendation of … February 2024 on discharge to be given to the Authority in respect of the implementation of the budget for the financial year 2022 (00000/2024 – C90000/2024),

– having regard to Article 319 of the Treaty on the Functioning of the European Union,

– having regard to Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, and in particular Article 70 thereof,

– having regard to Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC, and in particular Article 64 thereof,

– having regard to Commission Delegated Regulation (EU) 2019/715 of 18 December 2018 on the framework financial regulation for the bodies set up under the TFEU and Euratom Treaty and referred to in Article 70 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council, and in particular Article 105 thereof,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

– having regard to the report of the Committee on Budgetary Control (A90000/2024),

1. Grants the Executive Director of the European Banking Authority discharge in respect of the implementation of the Authority’s budget for the financial year 2022 / Postpones its decision on granting the Executive Director of the European Banking Authority discharge in respect of the implementation of the Authority’s budget for the financial year 2022;

2. Sets out its observations in the resolution below;

3. Instructs its President to forward this decision, and the resolution forming an integral part of it, to the Executive Director of the European Banking Authority, the Council, the Commission and the Court of Auditors, and to arrange for their publication in the Official Journal of the European Union (L series).

2. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on the closure of the accounts of the European Banking Authority for the financial year 2022

(2023/2146(DEC))

– having regard to the final annual accounts of the European Banking Authority for the financial year 2022,

– having regard to the Court of Auditors’ annual report on EU agencies for the financial year 2022, together with the agencies’ replies,

– having regard to Article 319 of the Treaty on the Functioning of the European Union,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

– having regard to the report of the Committee on Budgetary Control (A90000/2024),

1. Approves the closure of the accounts of the European Banking Authority for the financial year 2022 / Postpones the closure of the accounts of the European Banking Authority for the financial year 2022;

2. Instructs its President to forward this decision to the Executive Director of the European Banking Authority, the Council, the Commission and the Court of Auditors, and to arrange for its publication in the Official Journal of the European Union (L series).

3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Banking Authority for the financial year 2022

(2023/2146(DEC))

– having regard to its decision on discharge in respect of the implementation of the budget of the European Banking Authority for the financial year 2022,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

– having regard to the report of the Committee on Budgetary Control (A90000/2024),

A. whereas, according to its statement of revenue and expenditure, the final budget of the European Banking Authority (the ‘Authority’) for the financial year 2022 was EUR 50 315 014; whereas the Authority is primarily financed by a contribution from the Union (EUR 18 685 999), and contributions from national supervisory authorities of the Member States and observers (EUR 31 629 015);

B. whereas the Court of Auditors (the ‘Court’), in its report on the annual accounts of the European Banking Authority for the financial year 2022 (the ‘Court’s report’), states that it has obtained reasonable assurance that the Authority’s annual accounts are reliable and that the underlying transactions are legal and regular;

Budget and financial management

1. Notes with appreciation that the budget monitoring efforts during the financial year 2022 resulted in a budget implementation rate of current year commitment appropriations of 99,56 %, representing an increase of 1,05 % compared to 2021; further notes that the rate of execution of current year payment appropriation was 87,00 % representing an increase of 3,00 % compared to 2021;

Performance

2. Welcomes that the Authority continues to use certain measures as key performance indicators to assess its activities and the results towards its objectives of the work programme; observes that for 2022, the Authority has defined five vertical priorities (e.g. monitoring and updating the prudential framework for supervision and resolution, revisiting and strengthening the EU-wide stress testing framework) and two horizontal priorities (providing tools to measure and manage risks related to Environmental, Social, and Governance (ESG) and monitoring and mitigating the impact of Covid-19) for its work programme; notes that in 2022, the Authority executed 95 % of the approximately 250 tasks set out in its work programme, including 15 % of tasks which had to be added to the work in the course of the year, further recognises that this is an improvement compared to the previous year;

3. Is aware that the unjustified Russian war of aggression against Ukraine led the Authority to consider challenges and uncertainties arising from that conflict for areas within its remit and to address them accordingly; welcomes that as result the Authority placed a significant focus on assessing the risks for banks and the financial sector, and took action to monitor the sector; notes furthermore that additionally, the Authority focused on efforts contributing to the application and enforcement of imposed sanctions and on a more immediately relevant level for people affected by this conflict, welcomes the efforts of the Authority provided guidance to facilitate access to the financial system;

4. Observes that contributing to shaping the legislative dossiers Digital Operational Resilience Act and Markets in Crypto assets by way of the response provided to different calls for advice on digital finance and related issues were some of the important drivers of the Authority’s activity in 2022; notes that another point of focus lied on preventing the use of the financial system for the purposes of money laundering and terrorist financing (ML/TF); further notes that developing a relevant environmental, social and governance (ESG) framework for banks, and monitoring the impact of COVID-19 on their balance sheets remained at the forefront of the Authority’s work; acknowledges that the Authority also updated its Peer Review work plan for the period 2022-2023, in accordance with the EBA regulation (‘ESAs’ Review’);

Efficiency and gains

5. Welcomes that in the area of procurement, the Authority takes the approach of inviting other agencies to participate in its open procurement procedures, whenever there is a possibility of interest by other agencies; notes that in 2022, the Authority was the lead agency on one inter-institutional procurement procedure in which ESMA and EIOPA participated; notes furthermore that the Authority has also also participated in many inter-institutional procedures led by other EU entities, predominantly those run by the Commission; observes that in 2022, 77 % of the Authority’s 96 framework contracts in force were procured by other EU entities;

6. Notes that the Joint Committee of the Authority together with EIOPA, ESMA the Commission and the ESRB is a key forum to discuss common regulatory issues and agree joint initiatives; reminds that joint initiatives bring together diverse perspectives, reduce duplication of effort, enhance learning and strengthen relationships between the participants;

7. Welcomes that the Authority engages in extensive cooperation and resource-sharing initiatives with various agencies, like for example shared Accounting Services with ESMA, shared Security Officer with EIOPA, joint IT projects, investment in career development and providing experiences to assist other agencies in obtaining EMAS certification; further emphasizes the horizontal benefits of working together and adapting best practices;

8. Commends that the Authority has taken various initiatives such as process optimization, resource management, digitalization, collaboration enhancement, and fostering a continuous improvement culture; notes that key strategies include process automation (financial paperless transactions, mass payment load, workflow tools), resource optimization, data-driven decision-making, technology integration (cloud services, HR digitalization), collaboration through cross-functional teams and project management;

Staff policy

9. Notes that, on 31 December 2022, the establishment plan was 98,14 % implemented, with 159 temporary agents appointed out of 162 temporary agent posts authorised under the Union budget (same authorised post as in 2021); notes that, in addition, 44 contract agents (50 authorised) and 13 seconded national experts (19 authorised) plus 6 cost-free seconded national experts) worked for the Authority in 2022;

10. Observes that the overall turnover rate in 2022 was 11.5 % (vs. 12% in 2021); takes note that the overall turnover rate includes the end of contract of Seconded National Experts (SNEs) whose contracts run shorter term by nature whereas the staff turnover rate for statutory staff (Temporary agents and Contract agents) was 9 % (being slightly higher for contract agents than temporary agents); highlights that since 2020, the Authority has started enriching its talent management approach with further measures to empower staff and support long-term engagement (strong Employee Value Proposition, tailored career development programmes such as mentoring, work-life initiatives such as social club, etc.);

11. Notes the gender distribution within the Authority’s senior and middle management, with 16 out of 29 being men (55 %), and within the Authority’s overall staff, with 114 out of 222 (51 %) being men; supports that the Authority has adopted the EUAN’s Charter on Diversity and Inclusion (D&I); notes that the Authority is member of the “Choose Paris Region” network of international organisations promoting a diverse, inclusive and equitable workplace and provides specific accommodations to persons with disabilities as part of the recruitment process;

12. Is aware that a Staff Engagement Survey (SES) was launched in 2022 resulting in a response rate of 71 %; notes that the overall total favourable score which represents staff engagement was 65 % – higher by 1 % than in the previous SES of 2019 (despite the challenging COVID times) as well as if compared with EU Interagency benchmark;

Prevention and management of conflicts of interest and transparency

13. Welcomes that in 2022 the Authority streamlined the ethics process, particularly through the introduction of an electronic workflow system including a closer and more efficient assessment of notifications regarding potential conflicts of interest of departing staff and notifications of post-employment activities;

14. Recalls that in 2022, the Board of Supervisors adopted an amendment to its Rules of Procedure, as well as those of the Management Board and the mandates of the Standing Committees on Resolution and on anti-money laundering and countering terrorist financing, obliging members who have declared a conflict of interest to be absent from both the vote and the discussion itself, without exception;

15. Notes that following the closure of an OLAF investigation with no indication of irregularities regarding compliance with the relevant legal framework, the Authority received a recommendation to take administrative actions, particularly concerning senior management employment contracts; observes that the investigation revealed a lack of contractual provisions related to gardening leave and/or a 'cooling-off' period; highlights that in response, the Authority introduced a new article in contracts for directors, advisers, and above in February 2022; notes that, due to limitations within the Staff Regulations legal framework, the Authority informed OLAF that it cannot impose requirements on staff outside this framework, such as providing compensation when a former staff member is restricted from pursuing an occupational activity or faces substantial conditions in doing so;

16. Welcomes that the Authority discloses all staff meetings with external private sector stakeholders and it does it fortnightly for the Chairperson (pursuant to Article 49a of Regulation (EU) No 1093/2010) and this is applied in the same way to the Executive Director (whereas Article 52a requires meetings of the Executive Director to be made public but does not specify how soon after they are held); notes that in the meetings of other staff with private sector stakeholders, disclosure is done on a quarterly basis;

17. Draws attention to the closure of one whistleblowing case in 2022; notes that actions taken involved contacting a national competent authority to understand the allegations and actions being taken domestically, resulting in the closure of the case without any action required from the Authority;

18. Recalls that CVs of members of governing bodies and alternate members, senior managers and directors are published on the Authority’s websites; notes that those CVs include information regarding their professional experience and education; notes furthermore that as regards experts, the Authority publishes the CVs of the Banking Stakeholder Group (BSG);

Procurement

19. Takes note that according to the Court the Authority sought to procure services in two open tenders, one for market research for financial services and another for consultation on data protection; notes that in one tender there was an overlap between award and selection criteria; highlights that this goes against Article 167 of the Financial Regulation, which stipulates that there must be a complete separation between the selection and the award criteria; states that selection criteria are used to evaluate the capacity of the tenderers and award criteria are used to evaluate the price and quality of the offers; notes with regret that in both cases, the Authority overestimated the maximum value of the contracts because of shortcomings in the research on market prices it had carried out before launching the tender;

20. Acknowledges that according to the Court the procurement weakness affecting two separate negotiated procedures reported in 2021 have been corrected as the Authority is now using the Commission’s templates, bringing its procedures into line with the Court’s observation;

21. Highlights that since the 2020 financial year, the Court has raised new procurement-related observations every year for four agencies, and the Authority is one of those four Agencies; recalls that the objective of public procurement rules is to enable procuring entities to obtain the goods and services they need at best price, while ensuring fair competition between tenderers and compliance with the principles of transparency, proportionality, equal treatment and non-discrimination; calls on the Authority to ensure full compliance with procurement applicable rules to achieve the best possible value for money;

Internal control

22. Recalls that the work with a dedicated risk management partner to enhance the compatibility of the Authority’s current risk management programme with the COSO Enterprise Risk Management (ERM) framework started in 2021 and continued in 2022; notes that in order to strengthen internal controls further, the Authority plans to integrate its risk management program with the COSO ERM framework, intensify ethics-related activities, and provide tailored internal controls training in 2023 with the goal to uphold and enhance the effectiveness of the overall internal controls system;

23. Notes that according to the Court the internal control weakness affecting recruitment procedures reported in 2021 have been corrected as the Authority modified its procedures accordingly;

Other comments

24. Welcomes that in 2022, the Authority continued to promote its work and deliverables via a wide range communication channels like the corporate website, press interviews and social media platforms; notes that the Authority also increased the number of dynamic data visualisations aimed at presenting large amounts of data in a more comprehensive and digestible manner and published 149 press releases and news items, promoted the Agency’s work in the press and media, conducting 74 interviews and briefings with the press and responded to 706 queries via email;

25. Welcomes that in 2022,the Authority was awarded with the Eco-Management and Audit Scheme (EMAS) certificate and successfully achieved its 2022 environmental objectives and targets in the areas of travel, energy, waste, procurement, and core business; highlights that the achievements include a minimum 50 % reduction in travel-related activities, a 10 % decrease in building energy consumption, a dedication to recycling at least 70 % of waste, and the consideration of environmental impact in 100 % of contracts procured by the Authority;

26. Commends the Authority for undertaking to reduce energy consumption by 10 % in 2022 (compared to 2019); points out that in order to achieve this target, the Authority introduced measures such as: shifting heating schedules and decreasing setpoint temperatures on thermostats, switching energy supply fully to renewable energy sources, daily monitoring of meters to evaluate the action taken and an energy saving awareness campaign for staff; notes that the energy reduction achieved by the end of 2022 (compared to 2019) was 16.4 %;

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27. Refers, for other observations of a cross-cutting nature accompanying its decision on discharge, to its resolution of ... on the performance, financial management and control of the agencies.