SRB Holds Annual Conference, Reflects on Turning Policy into Action
SRB published a report on its fourth annual conference that was held on October 10, 2019 in Brussels. This year, the discussions focused on the implementation of bank resolution policy. The discussions identified several relevant issues, including completing the Banking Union, the lack of a functioning Capital Markets Union, the need for a more robust framework around liquidity in resolution, and the newfound information technology issues that impede the efficiency of resolution and operational continuity.
Elke König, the SRB Chair, highlighted that an updated Minimum Requirement for own funds and Eligible Liabilities (MREL) policy is to be released in early 2020. In terms of the future work areas, the SRB Chair mentioned the:
- Need for a backstop in the Single Resolution Fund or SRF
- Lingering issue of liquidity in resolution
- Harmonization of insolvency regimes
- Need for a functioning Capital Markets Union
With these needs clearly defined, the conference set an ambitious “to do” list of what should be accomplished now if resolvability is to be successful in future. In comparing the EU to other jurisdictions, the lack of a "single European market" was repeatedly flagged as a cause for concern. With investors still viewing banks on national terms (that is, German versus Italian, instead of European), EU is not an appealing market to investors. While it is for firms to make themselves resolvable, the resolution authorities need to be clear on what this means. Also identified was an overall need for greater clarity and, with it, increased transparency.
Furthermore, in his speech, Dietrich Domanski, the Secretary-General of FSB, focused on elements needed to maintain operational continuity when turning resolution policy into action. In this context, he mentioned the gaps identified in the eighth FSB report on implementation of resolution reforms in the areas of achieving a balance between prepositioned and nonprepositioned total loss-absorbing capacity (TLAC) resources, successful execution of a TLAC bail-in transaction, and liquidity in resolution. According to José Manuel Campa, the EBA Chair, progress has been slow and “... work still needs to be done both from the banks’ point of view and the authorities’ point of view. Only a few authorities have published guidelines on operational continuity.” EBA, he said, is working with supervisory authorities to help them create clear and common guidelines for banks on what is expected—for instance in terms of concretely identifying and mapping critical functions—across resolution authorities.
Related Links
Keywords: Europe, EU, Banking, Banking Union, SRF Backstop, Single Resolution Board, Annual Conference, Resolution Framework, MREL, Bail-In, Liquidity in Resolution, SRB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Related Articles
EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
FASB Proposes to Delay Implementation of Insurance Contracts Standard
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.
BCBS and FSB Set Out Recommendations for Benchmark Transition
BCBS and FSB published a report on supervisory issues associated with benchmark transition.
IAIS Sets Out Recommendations for Benchmark Transition for Insurers
IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.
ESMA Updates Reporting Manual on European Single Electronic Format
ESMA updated the reporting manual on the European Single Electronic Format (ESEF).
EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis
EBA published a statement on resolution planning in light of the COVID-19 pandemic.
ECB Guideline on Materiality Threshold for Credit Obligations Past Due
ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.
FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act
FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
