EC Report Reviews Application of BRRD and SRMR in EU
EC adopted a report that reviews the application of Bank Recovery and Resolution Directive (BRRD) and Single Resolution Mechanism Regulation (SRMR) in EU. These legal acts are key elements of the legislation that was adopted in the wake of the financial crisis and constitute the core building blocks of the Banking Union. Given that the two legislative instruments have thus far have been applied in a limited number of cases, the report concludes that more time is needed for their assessment before any amendments are proposed.
In its assessment, EC took stock of the implementation of the resolution legislation and its application to concrete banking cases. The legislation has been applied only in a very limited number of cases, out of which only one case concerned the resolution of an institution under SRMR. A number of these cases dealt with “legacy issues,” which accumulated during the financial crisis or before. Moreover, the provisions of the bail-in tool and the establishment of the Single Resolution Board became applicable only as of January 01, 2016. Additionally, other elements—such as resolution planning for larger and complex institutions and the provisions concerning MREL—require a phasing in to be fully implemented. Not to mention that certain crucial parts of the framework—including the provisions on Minimum Requirement for own funds and eligible Liabilities (MREL), moratorium powers, and the recognition of liabilities governed by third-country law—are still in the process of being amended and, once in place, transition periods will apply. After considering all these factors, the report concludes that more time is needed to fully assess the implications of the legislation.
EC will, however, continue to monitor the application of the resolution framework and further assess the identified issues. EC will also engage in a comprehensive discussion of the topics identified in this report with respect to BRRD and SRMR (as well as issues that may emerge from application of the resolution framework) with experts appointed by the European Parliament, member states, and all relevant stakeholders. This report has been prepared in accordance with the Article 129 of BRRD and Article 94 of SRMR, which require EC to review the application of the resolution framework and to submit a report to the European Parliament and the Council. The reports on the application of these legal instruments were due by June and December 2018, respectively. Due to the close links between these instruments, it was though to be appropriate to conduct a joint review for BRRD and SRMR.
Related Links
Keywords: Europe, EU, Banking, BRRD, SRMR, MREL, Banking Union, Resolution Framework, SRB, EC
Previous Article
ECB Publishes Results of Survey on Credit Terms and ConditionsNext Article
IAIS Publishes Newsletter for April 2019Related Articles
ECA Recommends Actions to Enhance Resolution Planning for Banks
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA Proposes Rules on Identity Verification of Depositor Protection
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
Bundesbank Publishes Derivation Rules for Reporting by Banks
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
ESAs Publish Reporting Templates for Financial Conglomerates
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
EBA Publishes Report on Asset Encumbrance of Banks in EU
EBA published the annual report on asset encumbrance of banks in EU.
FCA Proposes Guidance on Mortgage and Consumer Credit Repossessions
FCA proposed two sets of guidance on the approaches to mortgage repossessions and consumer credit repossessions, with comment period ending on January 18, 2021.