EBA published a handbook on valuation for the purposes of bank resolution. The handbook is addressed to national and EU resolution authorities. It aims to foster the convergence and consistency of valuation practices as well as the interaction with independent valuers across the EU.
The handbook, which is the result of close cooperation with national resolution authorities and the Single Resolution Board (SRB), intends to bridge the resolution regulatory approach with the valuation practices, by providing concrete guidance on the practical steps of the valuation process, on the specific valuation criteria applicable to the various resolution tools and, with a view to facilitating the adoption of an informed decision by the resolution authority, by indicating the content that is expected to be included in the valuation report. While the Handbook covers both the valuation before resolution and after resolution (aimed to determine the no creditor worse off), it focuses on the valuation before resolution, thus supporting the resolution decision, which immediately impacts shareholders and creditors.
The adoption of the handbook follows the regulatory activity of EBA in the area of valuation for resolution (regulatory technical standards, or RTS, on valuation before resolution, RTS on valuation after resolution, RTS on valuation of derivative liabilities for purposes of bail-in, and RTS on independent valuers) with the view to harmonizing valuations performed across the EU to support uniform resolution practices.
Keywords: Europe, EU, Banking, Valuations in Resolution, Resolution, BRRD, SRB, EBA
Across 15 years as a consultant and practitioner, Chris worked on a range of strategy, risk management and operational transformation initiatives with leading financial institutions throughout North America. From this collection of abstract, “what now?” challenges, he has developed specialties in credit optimization, business combinations and system implementations. Chris joined Moody’s in 2020 after leading CECL implementation and dual risk rating expansion at a $50 billion bank.
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