SRB Outlines Upcoming Changes in Context of CRR2 and BRRD2
SRB published presentations made at the 8th Industry Dialogue in Brussels. The Industry Dialogue brings together representatives from EU-level and national banking federations and their associates from Banking Union participating member states, representatives from national resolution authorities, EC, European Parliament, and ECB. The presentations covered the implications of, and the expected work streams, in the context of the newer requirements in the revised Capital Requirements Regulation (CRR) and Bank Resolution and Recovery Directive (BRRD).
SRB will soon publish a Policy Statement, keeping in mind the requirements of CRR2 and BRRD2. Until the transposition of BRRD2, MREL decisions issued by SRB, including any applicable transition periods, will be based on the current legal framework of SRMR1/BRRD1, implemented via the SRB 2018 Minimum Requirement for own funds and Eligible Liabilities (MREL) policy. As per the presentation titled "MREL and Capital Requirements Regulation 2," the new provisions of the Banking Package will also change the SRB reporting needs:
- Additional data will be required on internal MREL and loss-absorbing capacity for resolution planning (set intermediate MREL targets) and monitoring.
- EBA is mandated to draft implementing technical standards on templates and these are to be finalized by around mid-2020.
- SRB needs to bridge the gap in the transitional period.
- SRB will front-load future EBA implementing technical standard templates by launching a new data collection exercise in the transitional period.
Furthermore, for implementing the new resolution planning cycle, SRB will consider 2019 as a transition period to prepare and implement the steady-state cycle; it will aim for decisions, in 2020, that take into account to the extent possible the new legal framework once it enters into force. Bail-in preparation, along with the development of bail-in playbook, is priority in 2019 and 2020. SRB is also working on the “Expectations for banks,” which complements the Resolvability Assessment. This document is intended to make the banks under the direct remit of SRB aware of its general expectations regarding the steps and initiatives that aim to ensure the resolvability of a bank. Individual work programs will be tailored on the basis of a dialog between Internal Resolution Teams and banks. SRB plans to consult the industry on the “Expectations for banks” in the fourth quarter of 2019. The expectations will be phased in over time.
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Keywords: Europe, EU, Banking, CRR2, BRRD2, MREL Policy, Resolution Planning, SRMR2, SRB
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