The Swedish National Debt Office (SNDO) issued clarifications on the Swedish government's proposed revisions to the regulations for managing financial firms in crisis. The proposal was referred to the Council on Legislation for consideration by the Swedish government. The referral to the Council on Legislation contains proposals on how parts of the EU banking package are to be transposed into Swedish law. The referral pertains to parts of the banking package that concern resolution and the Minimum Requirement for Own Funds and Eligible Liabilities (MREL). The changes are proposed to enter into force on July 01, 2021.
At this juncture, SNDO clarified how certain regulatory changes will affect the its work in the near future. The referral states that the decisions of SNDO on MREL requirements in accordance with the new regulations shall apply as of January 01, 2024. To enable a linear build-up to the requirements that are to be met in 2024, SNDO must also determine intermediate target levels that will apply until then. Until decisions in accordance with the new regulations have been made, the MREL requirements that have been set under the current regulations will apply. As a result of these proposals in the referral, SNDO intends to make new decisions on MREL requirements in accordance with the regular cycle for resolution planning—that is, in December 2021. For Swedish banks that are subsidiaries of foreign groups, the time of decision may deviate from this.
When SNDO makes new decisions, the previous requirements will be replaced by a target level, which will apply as of January 01, 2022, as well as by a requirement that will apply as of January 01, 2024. SNDO intends to, in good time before December, revert with an updated memorandum on the application of MREL describing in further detail how these requirements will be determined. The target levels will be decided taking into account the banks’ current requirements and compliance, to enable a linear build-up until January 01, 2024. SNDO also mentioned that it will, during the Spring, present a referral for consideration with proposals for regulations, so that these can come into force as the same time as the new legislative proposal.
Effective Date: July 01, 2021 (Proposed)
Keywords: Europe, Sweden, Banking, MREL, Resolution Framework, Banking Package, Resolution Planning, Crisis Management Framework, Bail-In, Regulatory Capital, Basel, SNDO
Previous ArticleSARB Issues Guidance on Dividend Distributions and Bonus Payments
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.