SRB organized the tenth Industry Dialog that brought together representatives from EU-level and national banking federations and their associates from the Banking Union participating member states, along with the representatives from national resolution authorities, EC, European Parliament, and ECB. SRB published two event presentations: one presentation covers key milestones and challenges of the 2020 resolution planning cycle while the other presentation discusses the funding cost, build-up, and calibration of minimum requirement for own funds and eligible liabilities (MREL) in light of the COVID-19 crisis. Overall, the presentations indicate that the work and expectations of SRB in the coming months consider the impact of COVID-19 pandemic.
The presentation on the 2020 resolution planning cycle details the process, quality control, and strategic goals related to the resolution planning cycle. The Resolution Planning Cycle was launched on April 01, 2020. During the 2020 resolution planning cycle, SRB will update and enhance the resolution plans covering all banking groups under its remit and will set binding MREL targets for the group entities and subsidiaries. MREL decisions and excerpts of the updated resolution plans will be communicated to banks during the first and second quarters of 2021. During this cycle, SRB will also work on further operationalization of individual resolution strategies of banks and will focus its operational work with banks on:
- Implementation of the bail-in tool and further improvement of bail-in playbooks of banks
- Financial continuity and access to financial market infrastructures and resolvability assessment
- Operational continuity in resolution
The presentation mentions that, in April 2020, SRB published its “Expectations for Banks” to provide guidance to the industry on the actions to be taken to demonstrate resolvability. The “Expectations for Banks” are subject to a gradual phase-in and banks are expected to have built up their capabilities on all aspects by the end of 2023. The presentation also highlights that SRB is working on its multi-annual work program for 2021-2023. The priorities will include completion of the implementation of bank recovery and resolution directive or BRRD2 (including MREL build-up), operationalization of the resolvability assessment, and focus on operational preparedness for resolution and monitoring of banks’ progress to become resolvable. Additionally, the presentation highlights that the banks will receive bank-specific 2021 priority letters in the fourth quarter of 2020.
The presentation on MREL policy in light of COVID-19 crisis highlights that SRB will monitor the evolution of key balance sheet metrics and MREL capacity as of June 2020. Banks will be requested to provide key metrics and MREL capacity with reference date June 2020, to assess material balance sheet changes due to the COVID-19 crisis. SRB expects to receive the data by mid-August. However, adjustments with respect to a linear build-up of MREL will be assessed in light of banks’ specific circumstances. At the beginning of 2021, SRB will set intermediate targets that ensure an ambitious, yet realistic, level of MREL build-up toward the final target. When setting the intermediate target, SRB will take into account the need of banks to comply with the combined buffer requirements.
- Press Release
- Presentation on 2020 Resolution Planning Cycle (PDF)
- Presentation on 2020 MREL Policy (PDF)
Keywords: Europe, EU, Banking, MREL, MREL Policy, Banking Package, Resolution Planning, Industry Dialog, COVID-19, Resolution Framework, BRRD, SRB
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