March 29, 2019

SRB published a position paper on its expectations about the resolvability of banks in the context of Brexit. The position paper focuses on expectations in six key areas: minimum requirement for own funds and eligible liabilities (MREL) eligibility, internal loss absorbency, operational continuity, access to financial market infrastructures, governance, and management information systems.

In the context of Brexit, SRB reiterated its core requirements in the interest of transparency. They do not preclude future SRB policy development. The expectations set out in this position paper are aligned with the working priorities communicated on an individual basis to banks that are already under the SRB remit. The requirements apply to Banking Union banks, be it either banks with significant activities in third countries or Banking Union subsidiaries of third country banking groups. These banks include the following:

  • Groups that are headquartered in the Banking Union and have significant business or operational activities in third countries or will maintain such activities in the UK post Brexit (including but not limited to issuance of debt instruments under UK law)
  • Subsidiaries, under the remit of SRB, of groups headquartered in the UK or in third countries, which have significant business or operational activities in the Banking Union

As a result of the UK leaving the EU, some UK or third-country banking groups have decided to relocate their UK-based activities to the EU27 or to increase the extent or scope of existing activities therein. Also, some banks under the SRB remit may have significantly increased business or operational activities in third countries. SRB and the Supervisory Board of ECB are cooperating closely to ensure the requests of both authorities are aligned and conveyed to banking groups coherently and effectively. The elements presented in the position paper are consistent with the EBA Opinions on Brexit (EBA/Op/2018/05 and EBA/Op/2017/12) and in line with international standards on resolvability. 

 

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Keywords: Europe, EU, Banking, Brexit, Resolvability, MREL, Loss Absorbency, FMI, Banking Union, SRB

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