Featured Product

    ECB Issues Opinion on Participation in Single Resolution Mechanism

    April 17, 2019

    ECB published an opinion (CON/2019/16) on participation in the Single Resolution Mechanism (SRM). The opinion was issued in response to a request from the Bulgarian Minister of Finance for an opinion on a draft law amending and supplementing the Law on the recovery and resolution of credit institutions and investment firms, the Law on Bulgarian National Bank (BNB), and the Law on the bank deposit guarantee (draft law). The draft law introduces provisions that the consulting authority considers necessary in relation to the application of SRM Regulation (EU Regulation 806/2014) in Bulgaria.

    ECB understands that, under the existing law, BNB is already competent to apply both the bridge institution tool and the asset separation tool. BNB is the competent resolution authority to decide on a transfer to a bridge institution or an asset management vehicle of instruments of ownership, assets, rights, and liabilities. BNB is also competent to approve the operation of a bridge bank, a bridge financial holding company, or an asset management vehicle, upon proposal of the Bulgarian Deposit Insurance Fund (BDIF), while the capital of those entities is provided by the Bank Resolution Fund (BRF). The proposed transfer, to BNB, of the existing competences of the BDIF regarding the establishment and incorporation of bridge institutions and asset management vehicles does not confer genuinely new tasks on BNB. Rather, BNB’s proposed new administrative competences in relation to the management of the BRF complement the existing resolution tasks of BNB. The draft law specifies certain new administrative competences that BNB would exercise when carrying out its tasks as a resolution authority.

    ECB understands that BNB will manage, but not own, the BRF. The role of a resolution fund that is managed within a central bank must remain consistent under all circumstances with the prohibition on monetary financing under Article 123 of the Treaty, as supplemented by Council Regulation (EC) No 3603/9326, which prohibits, inter alia, any financing by a central bank of the public sector’s obligations vis-à-vis third parties. While administrative resolution tasks may be considered to be central banking tasks, the discharge of these tasks by central banks may not extend to the financing of resolution funds or other financial arrangements related to resolution proceedings, as these are governmental tasks. Where a resolution fund established within a central bank holds capital of a bridge institution or an asset management vehicle, it should be clarified, for the avoidance of doubt, that the central bank will not employ its resources, other than those collected in the resolution fund, to assume or finance any obligation of these entities.

    ECB notes that the BNB, the members of the BNB Governing Council, and the BNB staff are not held liable for acts or omissions in the course of discharging their duties under the Law on the recovery and resolution of credit institutions and investment firms, unless they acted intentionally. ECB understands that this provision applies also in relation to the draft law and the BNB’s tasks of managing the BRF and acting as the depository of the Investment Firm Resolution Fund (IFRF).

     

    Related Link: ECB Opinion (PDF)

     

    Keywords: Europe, Bulgaria, Banking, SRMR, Recovery and Resolution, CON/2019/16, Opinion, SRB, BNB, ECB

    Related Articles
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629