The Single Resolution Board (SRB) published the dashboard on minimum requirement for own funds and eligible liabilities (MREL), for the third quarter of 2021. The dashboard shows that shortfall against the 2024 final target reduced in the reporting period, with most banks either closing or reducing their shortfalls against the 2022 intermediate target. In a separate development, the SRB Chair discusses the key priorities for 2022, noting that SRB will continue to work with European partners on completing the Banking Union, including finding an institutional solution for liquidity in resolution, progressing on a common deposit guarantee system, and working on a European framework for bank insolvency.
The three key priorities or resolutions for 2022 involve:
- MREL build-up—Banks have been able to raise capital and debt instruments and build up further the necessary MREL buffers at record low interest rates. SRB will encourage all banks to continue to build up their MREL and fulfill requirements of the January 2022 intermediate MREL target and the 2024 final MREL target.
- Separability and reorganization plans—For mid-size banks, SRB is prioritizing the work on transfer tools, separability, and adjustments of MREL for such transfer tools. During 2021, SRB issued a guidance note on separability and plans to continue work on this area in 2022.
- Management information systems—SRB will prioritize the reorganization efforts of banks to become more efficient and customer-focused. Information technology and cyber risk management, will be a key priority, for banks to benefit from resolution planning and crisis preparedness.
In addition to these, a more transparent assessment of resolvability has long been a key priority for SRB. SRB has defined a heatmap as a tool to monitor, benchmark, and communicate the progress of banks toward full resolvability. SRB is evaluating the first cross-cutting assessment based on the progress made by banks so far in the form of such heatmap, and plans to publish an aggregated heatmap by the end of 2022.
Keywords: Europe, EU, Banking, MREL, MREL Dashboard, Work Priorities, Basel, Regulatory Capital, Resolution Framework, Banking Union, Deposit Guarantee Mechanism, SRB
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