ECB to Supervise Significant Institutions in Bulgaria and Croatia
SRB announced that Bulgaria and Croatia will join the Single Resolution Mechanism, following the ECB decisions to establish close cooperation with the central banks of Bulgaria and Croatia (BNB and HNB, respectively). The ECB decisions 2020/1015 on cooperation with BNB and 2020/1016 on cooperation with HNB have been published in the Official Journal of the European Union. The Governing Council of ECB adopted the decisions following the fulfillment of the necessary supervisory and legislative prerequisites. The Decisions indicate the modalities for the transfer of the supervisory tasks to ECB. The starting date of close cooperation of ECB with BNB and HNB shall be October 01, 2020. The Decisions shall enter into force on the fourteenth day following that of their publication in the Official Journal of the European Union.
Starting from October 01, 2020, ECB will be in charge of the direct supervision of the significant institutions in the Republic of Bulgaria and the Republic of Croatia, the common procedures for all supervised entities, and the oversight of less significant institutions. SRB will become the resolution authority for the significant institutions and all cross-border groups. SRB will also oversee resolution planning for less significant institutions. Banks and certain investment firms in the two countries will also contribute to the Single Resolution Fund, which supports bank resolution. As national resolution authorities of the two Banking Union member states, BNB and HNB will have representatives in Plenary Session and Extended Executive Sessions of SRB with the same rights and obligations as all other members, including voting rights. ECB Banking Supervision, BNB, and HNB are making preparations to ensure a smooth transition to the new supervisory regime. SRB and the national resolution authorities in Bulgaria and Croatia are well-prepared for a smooth transition to the new resolution regime.
In addition, ECB announced inclusion of the Croatian kuna and Bulgarian lev in the Exchange Rate Mechanism (ERM) II. The compulsory intervention rates for these currencies have also been established with effect from July 13, 2020. ECB published application letters from Bulgarian and Croatian Authorities and these letters include the post-entry commitments to be taken at the time of ERM II entry. ECB also published an assessment report on completion of the commitments made by the Republic of Bulgaria and the Republic of Croatia on the macro-prudential toolkit. The assessment report highlights that macro-prudential instruments that impose certain minimum standards on the issuance of new residential mortgage loans can play an important role in counteracting the build-up of systemic risks and strengthening the resilience of the financial system. A strong legal basis can support the effectiveness and active use of borrower-based measures. At the time of expressing the intent to join ERM II, borrower-based measures were not explicitly listed in the macro-prudential framework in Bulgaria and Croatia. In their letter of intent to join ERM II, the Bulgarian and Croatian authorities committed to broaden the macro-prudential toolkit by providing the legal basis for borrower-based measures. ECB concluded in the report that the prior commitment to broadening the macro-prudential toolkit by providing legislative basis for borrower-based measures has been fulfilled.
Related Links
- SRB Press Release
- Press Release on Cooperation with HNB
- Press Release on Cooperation with BNB
- Press Release on Compulsory Intervention Rates
- Decision 2020/1015
- Decision 2020/1016
- Application Letter from Croatian Authorities (PDF)
- Application Letter from Bulgarian Authorities (PDF)
- Assessment Report on Commitments by Croatia (PDF)
- Assessment Report on Commitments by Bulgaria (PDF)
Effective Date: July 27, 2020
Keywords: Europe, EU, Croatia, Bulgaria, Banking, Close Cooperation, Resolution Planning, Significant Institutions, Less Significant Institutions, ERM II, Systemic Risk, Macro-Prudential Framework, BNB, HNB, ECB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
