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
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleFCA Consults on Various Handbook Amendments
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.