SRB Industry Dialog Covers MREL Policy, Resolution Planning, and SRF
SRB held the eleventh Industry Dialog bringing together representatives from EU-level and national banking federations and their associates from the Banking Union participating member states, along with the representatives from national resolution authorities, EC, European Parliament, and ECB. SRB has published event presentations that offer updates on aspects of minimum requirement for own funds and eligible liabilities (MREL) policy, preparations for the resolution planning cycle (RPC) for 2021, and timeline for the Common Backstop of the Single Resolution Fund. SRB expects to issue an update of the 2020 MREL policy in the first half of 2021.
The presentation on the MREL policy outlines the approach and timeline for the permission regime to reduce eligible liabilities under CRR. From January 01, 2022, the scope of permission regime will be enlarged to include senior unsecured and internal MREL-eligible liabilities. Revisions to the permission regime are required due to application of revised Single Resolution Mechanism Regulation (SRMR2) on December 28, 2020 and of the EBA regulatory technical standards on procedural aspects of the permission regime, which are expected in the first quarter of 2021. The presentation also discusses the requirements and timeline for the MREL Maximum Distributable Amount (M-MDA) regime. M-MDA applies to transitional TLAC requirements from December 28, 2020 to December 31, 2021. It applies to intermediate MREL targets including subordination/fully loaded Total Loss-Absorbing Capacity (TLAC) requirements from January 01, 2022. Additionally, SRB will introduce the following additional steps for confirming the MREL eligibility of reported liabilities and enhancing the accuracy of reports:
- Eligibility Checklist for Reporting Officers on specific eligibility conditions and types of liabilities, guiding the preparation of the Additional Liabilities Report
- Management Sign-Off Form signed by bank management confirming MREL eligibility of liabilities reported in the Additional Liabilities Report
- Bank-level verifications of reported liabilities with banks
The presentation on preparations for the resolution planning cycle for 2021 highlights that experiences from the 2020 cycle have provided useful input to further strengthen the SRB resolution planning approach. It also notes that the 2021 priority letters were sent to relevant banks in November 2020. These letters include bank-specific priorities and the common priorities in line with the phase-in of the Expectation for Banks. The common priorities include liquidity in resolution, MIS capabilities for valuation data, and bail-in implementation. Banks have been asked to provide two key deliverables: fully developed and budgeted resolvability work program for 2021 and beyond, for becoming compliant with the Expectation for Banks (including a detailed 2021 work program), along with the resolvability progress report. In the planning cycle for 2021, SRB will start implementing the recently published SRB Multiannual Work Program 2021-2023. From a resolution planning perspective, the Multiannual Work Program defines the planning and objectives for the next three years.
The presentation on Single Resolution Fund offers a general update, covers evolution of covered deposits, and outlines timeline for the common backstop to the Single Resolution Fund. The European Stability Mechanism has been identified as common backstop provider on behalf of the euro area. The Euro Group announced the agreement for an early introduction of the Backstop in January 2022. The presentation also outlines the agreed general principles constituting the basis for the common backstop: it would be available as a last resort, maintain fiscal neutrality over the medium term, entail equivalent treatment across all Banking Union member states, and involve no costs for member states that do not participate in the Banking Union. Additionally, financial resources would be available beyond the immediate capacity of the Single Resolution Fund, to cover capital and liquidity needs and repayment would be spread out over time, easing the pressure on the financial sector.
Related Links
- Press Release
- Presentation on MREL Policy (PDF)
- Presentation on Resolution Planning Cycle (PDF)
- Presentation on Single Resolution Fund (PDF)
Keywords: Europe, EU, Banking, MREL, MREL Policy, Resolution Planning, Industry Dialog, Resolution Framework, SRMR2, Single Resolution Fund, Common Backstop, SRB
Previous Article
BCB Proposes Changes to Credit and Market Risk Rules Under Basel IIIRelated Articles
BIS Paper Studies Impact of Fintech Lending on Small Businesses in US
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
EBA Launches EU-Wide Transparency Exercise in 2022
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
EC Rule Lists Advanced Economies for Market Risk Capital Calculations
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
