Featured Product

    SRB Chair Speaks About Focus Areas of the Upcoming SRB Policy

    January 17, 2019

    While speaking at the BPFI Conference in Dublin, the SRB Chair Elke König discussed the role of SRB, which is primarily to end the concept of "too-big to fail." She described where SRB fits into the overall regulatory structure in EU, before elaborating on the policy areas for the coming year.

    According to Dr. König, one of the fundamentals in making banks resolvable is the building up of loss-absorption capacity. Recently, SRB published a new policy document on MREL. In 2018, SRB split the cycle for resolution planning into two waves. This has followed a transitional two-step approach to the MREL-setting process. This recent policy applies to the second wave of resolution plans, which are those of the most complex groups. The first part of this two-wave process was published in November 2018. The first part covered banks that did not have binding targets—those without presence outside the Banking Union. SRB will, therefore, review its policy for MREL-setting for further updates in 2019 on the basis of the publication of the Banking Package in the Official Journal of the European Union, with the aim of charting a consistent path and preparing banks to transition to the new regime as well as to reflect any change necessary due to those requirements potentially coming into force in 2019.

    While the 2018 SRB policy follows a number of the elements defined in the 2017 policy, some new elements are added into the 2018 policy. There are three elements of note—namely, location of eligible resources, subordination, and setting of MREL at the individual level. The resolution plans are now in place for all of institutions and the work of SRB has begun to focus on fine-tuning each plan to ensure that it is truly ready to be sprung into action at short notice. "Banks need to build up the required MREL but they also need to develop the playbook on how to operationalize a write-down or bail-in." In this context operational continuity has been considered one of the priorities of 2018 resolution planning cycle. With specific regard to the Irish context, it is worthwhile to mention that there are some domestic banks that have UK subsidiaries, for which the PRA requirements on operational continuity apply since January 01, 2019. However, the banks have taken an overarching group-wide approach to also meet the SRB expectations on operational continuity. She highlighted that the same approach is followed by UK banks with subsidiaries in Ireland, where SRB is the host authority, to ensure that operational continuity in resolution will be achieved on a group-wide basis and not just for group entities in the UK.

    She added that part of the SRB resolution planning involves making sure that in times of crisis, operations can continue normally. Irrespective of the service delivery model adopted, banking groups are expected to structure their operational arrangements to facilitate the continuity of critical services in resolution. This particularly requires the following:

    • Undertake a comprehensive identification and mapping of critical services to critical functions and core business lines and an adequate documenting of contractual arrangements and service-level agreements
    • Maintaining access to key operational assets (such as IT infrastructure) and mitigating key staff departing
    • Achieving resolution-resilient contractual service provisions
    • Ensuring financial resilience of service provision
    • Ensuring appropriate governance arrangements

     

    Related Link: Speech

    Keywords: Europe, EU, Ireland, Banking, Loss Absorbing Capacity, MREL, Operational Continuity, Resolution Planning, SRB

    Related Articles
    News

    EBA Updates List of Validation Rules for Reporting by Banks

    EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.

    September 10, 2020 WebPage Regulatory News
    News

    EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework

    EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).

    September 10, 2020 WebPage Regulatory News
    News

    NGFS Advocates Environmental Risk Analysis for Financial Sector

    NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.

    September 10, 2020 WebPage Regulatory News
    News

    MAS Issues Guidelines to Promote Senior Management Accountability

    MAS published the guidelines on individual accountability and conduct at financial institutions.

    September 10, 2020 WebPage Regulatory News
    News

    APRA Formalizes Capital Treatment and Reporting of COVID-19 Loans

    APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.

    September 09, 2020 WebPage Regulatory News
    News

    SRB Chair Discusses Path to Harmonized Liquidation Regime for Banks

    SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.

    September 09, 2020 WebPage Regulatory News
    News

    FSB Workshop Discusses Preliminary Findings of Too-Big-To-Fail Reforms

    FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.

    September 09, 2020 WebPage Regulatory News
    News

    ECB Updates List of Supervised Entities in EU in September 2020

    ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.

    September 08, 2020 WebPage Regulatory News
    News

    OSFI Identifies Focus Areas to Strengthen Third-Party Risk Management

    OSFI published the key findings of a study on third-party risk management.

    September 08, 2020 WebPage Regulatory News
    News

    FSB Extends Implementation Timeline for Framework on SFTs

    FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.

    September 07, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5796