EC approved prolongation of the Irish scheme for the orderly winding up of credit unions until May 31, 2021. EC found the scheme to be in line with the EU State Aid rules. The scheme is intended to safeguard financial stability when a credit union becomes unable to meet regulatory requirements. The scheme allows Ireland to provide aid for transferring the assets and liabilities of a failing credit union to an acquirer through a competitive process. In Ireland, credit unions are small financial institutions that are not covered by the Bank Recovery and Resolution Directive (BRRD).
The scheme allows Ireland to provide aid for transferring the assets and liabilities of a failing credit union to an acquirer through a competitive process. This will help to achieve the maximum value for the assets and liabilities, ensuring that the aid is limited to the minimum necessary for an orderly winding up and that no buyer gains an undue economic advantage through the acquisition of under-priced assets and liabilities. Ireland chose to make a special sector-funded resolution scheme available to the credit unions, which has been used only three times since its setup. The scheme was initially approved in December 2011 and has been prolonged fifteen times since then, with the last prolongation being in June 2019.
Post the financial crisis, EC had adopted a comprehensive framework to support financial sector during the crisis and this framework spells out common conditions at the EU level for access to public support and the requirements for such aid to be compatible with the internal market in light of state aid principles. It comprises Banking Communication, the Recapitalization Communication, the Impaired Assets Communication, and the Restructuring Communication. These special rules were introduced under Article 107(3)(b) of the Treaty on the functioning of the EU that allows EC to approve state support to remedy a serious disturbance in the economy of a member state.
Keywords: Europe, EU, Ireland, Banking, Credit Unions, Resolution, Orderly Resolution, Crisis Management Framework, EC
Previous ArticleACPR Implements Updates Related to Version 2.9.1 of FINREP Taxonomy
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
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).
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.
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
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.
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI published the key findings of a study on third-party risk management.
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.