EBA published a statement on resolution planning in light of the COVID-19 pandemic. In the statement, EBA expresses its views regarding update of resolution plans, update of the minimum requirement for own funds and eligible liabilities (MREL) decisions, removal of impediments to resolvability, and activation of resolution colleges. EBA states that resolution authorities should take into account the impact of COVID-19 on banks and their business models when taking decisions on resolution plans and on MREL. In addition, resolution authorities should use and test resolution colleges as the main fora to exchange information and share decisions in these times of stress.
Through this statement, EBA aims to re-affirm that resolution planning is crucial in time of uncertainty to ensure that resolution is a credible option in case of failure. The focus of the statement is on ensuring that the current situation is effectively taken into account by resolution authorities while maintaining a through-the-cycle approach and ensuring that resolvability objectives are achieved. To the extent possible, resolution authorities should consider the impact of COVID-19 on potential credible recovery options and recovery plans, as those are being updated following a recent EBA statement on the topic. The use of updated information should not mean that public interest assessments and resolution plans should necessarily change to reflect COVID-19-related changes as those may be temporary. MREL decisions and their monitoring, to the extent possible, should reflect the most recent supervisory capital requirements while keeping in mind the fast approaching implementation of the Bank Recovery and Resolution Directive (BRRD2). In assessing whether to adjust their MREL decisions taking into account the most recent supervisory and balance sheet data, resolution authorities would need to consider the temporary nature of some data variations to adopt a through-the-cycle approach and prepare a smooth transition to BRRD2.
Keywords: Europe, EU, Banking, Resolution Framework, COVID-19, MREL, Resolution Plans, Resolution Colleges, EBA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleBCBS and FSB Set Out Recommendations for Benchmark Transition
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.