Featured Product

    Elke König of SRB Outlines Priorities for 2020

    December 03, 2019

    The SRB Chair Elke König addressed the ECON Committee of the European Parliament on the status of the current priority areas for SRB and elaborated on the SRB priorities for 2020, highlighting that implementation of the Banking package will be a major priority for the months ahead. She highlighted that the Banking Package strengthens the resolution framework, but also poses implementation challenges for SRB. The key tasks on the agenda include finalization of the new Minimum Requirement for own funds and Eligible Liabilities (MREL) policy by the second quarter of 2020, finalization of the European Deposit Insurance Scheme during this parliamentary term, continued progress toward resolvability assessment, and finding a solution for liquidity in resolution.

    The building up of MREL is very important for resolution planning; therefore, SRB has taken a gradual, multi-year approach to MREL, with the goal of maintaining proportionality in the system while preserving a level playing field and upholding high resolution standards across the Banking Union. In the last two resolution planning cycles, SRB has taken binding MREL decisions at consolidated and individual levels. By the end of 2019, SRB will have adopted decisions with MREL targets at the consolidated level for approximately 83% of the banks with resolution plans. Even though the revised Bank Recovery and Resolution Directive (BRRD2) and the Single Resolution Mechanism Regulation (SRMR2) only kick in from December 28, 2020, SRB has already advanced in revising its MREL policy with a view to discuss new policy elements with the participants of  the Single Resolution Mechanism and with a view to consulting the industry in early 2020. The goal is to have the new MREL policy ready by the second quarter of 2020. This would allow SRB to start applying it in the course of the 2020 resolution planning cycle and to take MREL decisions based on the new legal framework in the first or second quarter of  2021, when SRMR2 will be applicable and when member states should have transposed the BRRD2.

    The SRB Chair pointed out that the new legislation is complex and the resulting framework not only requires banks to continue on their path toward resolvability, but also to follow stricter rules for MREL. The new framework requires firmer conditions for instruments to be considered MREL-eligible; requires a number of banks to meet higher subordination requirements; and calls for banking groups to comply with the internal MREL requirements. SRB is working with the national resolution authorities and is in touch with EC, ECB, and EBA. However, recent experience shows that it will inevitably take some time for authorities to overcome the interpretation and implementation issues. This is another argument for the step-by-step introduction of the new framework, since it is already clear that the level two texts of EBA will be delayed.

    Another challenging task that is very high on the SRB agenda is the resolvability assessment. Based on these ongoing efforts, SRB is revising its internal policy on resolvability assessment, to integrate an overall consistent resolvability assessment into the upcoming resolution planning cycle for 2020. Concretely, SRB envisages the creation of a "heat-map" classifying banks in accordance with progress made on each resolvability condition and the relative impact this progress has on the feasibility of the preferred resolution strategy. An area where improvements need to be made is the need for a better alignment between resolution and insolvency, including a bank liquidation regime or harmonized license withdrawal process. She added that a solution for liquidity in resolution is still not in sight. In 2020, SRB continue to increase the Single Resolution Fund while it is hoped that the details around the backstop to the Fund can be worked out and hopefully progress can be made soon—perhaps even in tomorrow’s meeting of the EuroGroup. Finally, SRB would like to see more work to complete and strengthen the Capital Markets Union and hopes that an agreement can be reached on the European Deposit Insurance Scheme, which is the third and final pillar of the Banking Union, during this parliamentary term. 

     

    Related Link: Speech

    Keywords: Europe, EU, Banking, BRRD, Resolvability Assessment, Banking Package, MREL, Resolution Framework, BRRD2, SRMR2, Single Resolution Fund, SRB

    Related Articles
    News

    PRA Proposes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    PRA proposed rules (in CP12/21) for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA).

    June 21, 2021 WebPage Regulatory News
    News

    ECB Extends Leverage Ratio Relief for Banks Until March 2022

    ECB Banking Supervision announced that euro area banks it directly supervises may continue to exclude certain central bank exposures from the leverage ratio until March 2022.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Treatment of Credit Valuation Adjustments

    OSFI decided to increase the Domestic Stability Buffer from 1.00% to 2.50% of total risk-weighted assets, with effect from October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    HKMA Requires Banks to Submit Plans for Fintech Adoption

    HKMA is requesting banks to participate in a tech baseline assessment, which forms part of the HKMA Fintech 2025 strategy.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Operational Risk Capital Data Management Expectations

    OSFI published two documents to consult on the management of operational risk capital data for institutions required, or for those applying, to use the Basel III standardized approach for operational risk capital in Canada.

    June 18, 2021 WebPage Regulatory News
    News

    NGFS on Addressing Financial Stability Issues from Biodiversity Loss

    The NGFS Study Group on Biodiversity and Financial Stability published a Vision paper exploring the case for action in addressing the financial stability concerns arising from biodiversity loss.

    June 18, 2021 WebPage Regulatory News
    News

    ACPR Publishes CREDITIMMO Version 2.3.0 Taxonomy for Banks

    ACPR published the final version of CREDITIMMO 2.3.0 taxonomy for the decree of October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    EC Prolongs Italian Guarantee Scheme for Non-Performing Loans

    EC, has approved, under the EU State Aid rules, the fourth prolongation of the Italian guarantee scheme to facilitate the securitization of non-performing loans.

    June 18, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Temporary Collateral Easing Measures

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

    June 17, 2021 WebPage Regulatory News
    News

    EIOPA Releases Report on Artificial Intelligence Governance Principles

    EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.

    June 17, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7128