BoE and PRA are consulting on the resolvability assessment framework (RAF) package. The two consultation papers that make up the package are an important step in BoE's commitment to Parliament that major UK banks will be fully resolvable by 2022. The consultations close on April 05, 2019. Also published was an "Introduction to the Resolvability Assessment Framework," which contains an overview of the RAF, along with a foreword from Jon Cunliffe, Deputy Governor for Financial Stability, and Sam Woods, Deputy Governor for Prudential Regulation, and CEO of PRA.
The package comprises three main components:
- A BoE consultation paper, which proposes how the BoE, as the resolution authority, intends to assess individual banks' resolvability and the three outcomes it deems necessary to support a successful resolution. These three outcomes are having adequate financial resources; being able to continue to do business through resolution and restructuring; and being able to coordinate and communicate within BoE, with authorities and markets so that resolution and restructuring are orderly. The BoE consultation paper would apply to UK firms whose resolution strategy is a Bank-led bail-in or partial transfer and to material UK subsidiaries of international firms for the purposes of setting internal minimum requirement for own funds and eligible liabilities (MREL) in the UK.
- A PRA consultation paper (CP31/18), which contains proposed requirements for banks to assess their preparations for resolution, identifying any risks to implementation and their plans to address these risks. Banks will be required to submit their assessments of their preparation for resolution to PRA by September 2020 and to publicly disclose a summary of that assessment by June 2021. This would apply to the largest UK banks with at least GBP 50 billion in retail deposits on an individual or consolidated basis.
- Announcement that BoE will publish a statement about its assessment of resolvability of each firm, highlighting any shortcomings where it believes there is more work to do. Firms’ summaries and Bank statements are planned to be published at the same time.
Comment Due Date: April 05, 2019
Keywords: Europe, UK, Banking, Resolution Framework, Resolution Planning, Internal MREL, PRA, BoE
Next ArticleBaFin Announces Supervisory Priorities for 2019
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED released hypothetical scenarios for a second round of stress tests for banks.
FED is proposing to temporarily revise the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes necessary to conduct stressed analysis in connection with the re-submission of capital plans, using data as of June 30, 2020.
FED adopted a proposal to extend for three years, with revision, the information collection under the market risk capital rule (FR 4201; OMB No. 7100-0314).
EBA published a voluntary online survey seeking input from credit institutions on their practices and future plans for Pillar 3 disclosures on the environmental, social, and governance (ESG) risks.