Featured Product

    SRB Publishes Framework for Performing Valuations in Resolution

    February 19, 2019

    SRB published its framework for performing valuations in bank resolution. The framework provides independent valuers and the general public with an indication of the expectations of SRB on the principles and methodologies for valuation reports, as set out in the legal framework. This refers to the Valuation 2 (either provisional or definitive, as the case may require) as well as Valuation 3.

    The three kinds of valuation can be distinguished in the context of resolution:

    • Valuation 1 (prior to resolution)—valuation required to inform the determination of whether the conditions for resolution or the write-down or conversion of capital instruments are met
    • Valuation 2 (prior to resolution)—valuation required to inform the choice of resolution action to be adopted, the extent of any eventual write-down or conversion of capital instruments, and other decisions on the implementation of resolution tools
    • Valuation 3 (after resolution)—valuation required to determine whether an entity’s shareholders and/or creditors would have received better treatment if the entity had entered into normal insolvency proceedings and could therefore claim under the ‘no creditor worse off’ rule (Articles 20(16)-(18) SRMR)

    The framework for valuation describes what is expected from the valuer, the characteristics of the valuation report, including explanations of certain assumptions or deviations thereof, and the relationship between the implementation of resolution tools and the characteristics of the valuation. The framework aims to reduce uncertainty for both the independent valuers and the SRB, providing indications that are necessary for achieving the goals of the valuation, subsequently enhancing comparability and consistency of valuations across future resolution cases. 

    EBA and SRB have collaborated closely in their respective work on valuation. Additionally, EBA and SRB will continue to make progress together to define expectations toward the provision of accurate and timely information that is necessary for the performance of valuations in resolution. The Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR) require that resolution authorities, before taking resolution action or exercising the power to write down or convert relevant capital instruments, ensure that a fair, prudent and realistic valuation of the assets and liabilities of the institution is carried out by a person independent from any public authority, including the resolution authority, and the institution. 

     

    Related Links


    Keywords: Europe, EU, Banking, Resolution, Valuations in Resolution, BRRD, SRMR, EBA, SRB

    Related Articles
    News

    HKMA Revises Implementation Schedule for Initial Margin Rules

    HKMA intends to adopt a revised implementation schedule for the margin requirements for non-centrally cleared derivatives.

    August 16, 2019 WebPage Regulatory News
    News

    HKMA Revises Guideline on Application of Banking Disclosure Rules

    HKMA issued a revised version of the Supervisory Policy Manual module CA-D-1 on guideline on the application of the Banking (Disclosure) Rules (BDR).

    August 16, 2019 WebPage Regulatory News
    News

    ECB Decision on Recognizing Reporting Member States Under AnaCredit

    ECB has finalized the Decision 2019/1348 (ECB/2019/20) that establishes procedure for recognizing non-euro area member states as reporting member states under the AnaCredit Regulation (EU 2016/867).

    August 16, 2019 WebPage Regulatory News
    News

    FASB Proposes to Extend CECL Standard Deadline for Certain Entities

    FASB proposed an Accounting Standards Update that would grant private companies, not-for-profit organizations, and certain small public companies additional time to implement FASB standards on current expected credit losses (CECL), leases, and hedging.

    August 15, 2019 WebPage Regulatory News
    News

    IASB Adds Phase Two of IBOR Reform to Its Work Plan

    IASB (or the Board) has added the second phase of its project focused on potential financial reporting implications linked to the interest rate benchmark reform—interbank offer rate (IBOR) reform—to its work plan.

    August 15, 2019 WebPage Regulatory News
    News

    FED Updates Draft Instructions for Proposed FR Y-14 Reporting Forms

    FED updated draft instructions for the monthly, quarterly, and annual capital assessments and stress testing reports, also known as forms FR Y-14M, FR Y-14Q, FR Y-14A, respectively.

    August 15, 2019 WebPage Regulatory News
    News

    FASB Proposes Taxonomy Changes Related to Topics 326, 815, and 842

    FASB is proposing taxonomy improvements for the proposed Accounting Standards Update on clarifying the interactions among topic 321 on investments in equity securities), topic 323 on investments under equity method and joint ventures), and topic 815 on derivatives and hedging.

    August 15, 2019 WebPage Regulatory News
    News

    OCC Updates Bank Accounting Advisory Series in August 2019

    OCC released an update to the Bank Accounting Advisory Series (BAAS), which reflects accounting standards issued by FASB, through March 31, 2019, on topics such as hedging and credit losses.

    August 15, 2019 WebPage Regulatory News
    News

    APRA Consults on Final Phase Margin Rules for Uncleared Derivatives

    APRA is consulting on amendments to the prudential standard CPS 226 on margin and risk mitigation requirements for non-centrally cleared derivatives.

    August 14, 2019 WebPage Regulatory News
    News

    APRA Applies Additional Capital Requirement for an Australian Insurer

    APRA decided to apply an additional $250 million capital requirement to Allianz Australia Limited to reflect the issues identified in the risk governance self-assessment by the insurer.

    August 14, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3646