BaFin published the final Circular 05/2019 that covers the minimum requirements for implementing a bail-in for supervised institutions. The circular contains minimum requirements for information to be provided and for the technical and organizational resources needed to ensure the provision of information. These requirements are important prerequisites for a swift and precise implementation of the Write Down and Conversion of Capital Instruments (WDCCI) power and the bail-in tool pursuant to Sections 89 and 90 of the German Act on the Recovery and Resolution of Institutions and Financial Groups and Articles 21 and 27 of Single Resolution Mechanism Regulation (SRMR).
The circular is addressed to all institutions under the responsibility of BaFin as national resolution authority, provided that BaFin has informed the institutions in the context of resolution planning that the requirements have to be compiled with. The circular was submitted for consultation from February to March 2019. In the context of resolution planning, the resolution authority must examine the resolvability of institutions and groups, improve resolvability, and remove impediments to resolvability, if necessary. This includes examining whether a selected resolution strategy is feasible and whether there are potential grounds for refusal. Among other things, it must be examined whether
- Management information systems are able to provide the information that is essential for effective implementation of the institution at any time, even under the rapidly changing conditions
- An institution is able to provide the information necessary to determine the amount of the required write-down and/or recapitalization
The circular also supplements the information requirements of the Liability Data Reporting (LDR) of BaFin but does not replace them. Information for BaFin LDR template and the processes for preparation of this template can be used as a basis. However, information from the BaFin LDR template must be supplemented, first, because not all the necessary information relevant to decision-making with regard to WDCCI power and bail-in tool is taken into account. Second, in contrast to the BaFin LDR template, the bail-in information must be provided ad hoc and at short notice.
Keywords: Europe, Germany, Banking, Minimum Requirements, Bail-In, Resolution Planning, Reporting, BaFin
Previous ArticleFDIC Amends Rule on Timely Deposit Insurance Determination
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
PRA published a statement to insurers that clarifies the approach to application of the matching adjustment during COVID-19 crisis.
EBA published a report on the implementation of selected COVID-19 policies within the prudential framework for banking sector.
EC launched a consultation to revise the network and information systems (NIS) Directive (2016/1148), which was adopted in July 2016 and is the first horizontal internal market instrument aimed at improving the resilience of the EU against cybersecurity risks.
PRA published a statement that outlines its view on the implications of LIBOR transition for contracts in scope of the “Contractual Recognition of Bail-In” and “Stay in Resolution” parts of the PRA Rulebook.
PRA published the policy statement PS15/20 to reflect additional resilience associated with higher macro-prudential buffers in a standard risk environment with a reduction in Pillar 2A capital requirements.
BCBS published the eighteenth progress report on implementation of the Basel III regulatory framework in member jurisdictions.
FCA announced proposals that would provide continued support for certain consumer credit products to users, who are facing a financial impact because of the exceptional circumstances arising from the COVID-19 pandemic.
ACPR published a draft version of taxonomy RAN 1.4.0_PWD1, along with the related documentation, for Solvency II reporting.
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).