Featured Product

    Elke König of SRB on Financial Integration and Consolidation of Banks

    May 06, 2019

    The SRB Chair Elke König published an article in The Eurofi Magazine and the article discusses the implications of bank consolidation and the challenges to be addressed by regulators toward financial integration in the Banking Union. From the perspective of SRB, whose mandate focuses on achieving resolvability of banks, having strong European banks is a natural aspiration. She highlighted that consolidation can improve diversification of risks in banking groups, increase bank access to capital markets, and decrease their funding cost, ultimately facilitating the build-up of loss absorption capacity to meet the minimum requirement of eligible liabilities (MREL).

    Cross-border banks can play the important role of reducing risks through private risk-sharing in the Banking Union. Consolidation in the banking sector should not be seen as a shortcut to avoid necessary reforms. It is crucial for a resolution authority that consolidation facilitates, instead of hindering, the resolvability of a bank, in line with the resolvability expectations of SRB. In addition, the establishment of the institutional infrastructure of the Banking Union can also be seen as a favorable element. Even though the third pillar, common deposit insurance, is yet to be built, a single supervisory mechanism and a single resolution mechanism are up and running.

    However, financial integration within the Banking Union is still lagging behind. There are challenges that could be addressed by policymakers and regulators. The harmonization of relevant legislation, such as insolvency proceedings, could also contribute to remove barriers for the cross-border consolidation of banks. Rule-makers and regulators should resist the temptation of ring-fencing capital and liquidity resources, as this can lead to sub-optimal location and rigidity in the deployment of such resources. Regrettably, the recently agreed banking package does not mark a step forward on this aspect. Rather, it runs the risks of, first, fragmenting decision-making in the Banking Union on external MREL, and second, ring-fencing of internal MREL. SRB already invests and will continue to invest significant resources to reach joint decisions with national authorities on resolution plans, on calibration and location of MREL, and on bail-in playbooks. 

     

    Related Link: Article

     

    Keywords: Europe, EU, Banking, MREL, Banking Union, Financial Integration, Consolidation of Banks, SRB, Resolution

    Related Articles
    News

    APRA Consults on Standard for Reporting of COVID-19 Loans

    APRA issued a letter to authorized deposit-taking institutions announcing its intent to formalize the capital measures and reporting requirements for COVID-19 loans through temporary legislative instruments.

    August 13, 2020 WebPage Regulatory News
    News

    EBA Consults Industry on Use and Uptake of Regtech Solutions Across EU

    EBA is inviting relevant stakeholders, such as financial institutions and information and communication technology (ICT) third-party providers, to share their views and experience on the use of regtech solutions through its regtech industry survey.

    August 12, 2020 WebPage Regulatory News
    News

    FCA Finalizes Guidance to Extend Measures for Insurers Amid COVID

    FCA finalized the guidance extending measures to help customers that hold insurance and premium finance products and are in temporary financial difficulty because of COVID-19 crisis.

    August 12, 2020 WebPage Regulatory News
    News

    BoE Clarifies Approach to Treatment of Payment Holidays on Form PL

    BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.

    August 11, 2020 WebPage Regulatory News
    News

    FASB to Conduct Post-Implementation Review of CECL Standard

    FASB announced the launch of its new Post-Implementation Review (PIR) web portal.

    August 11, 2020 WebPage Regulatory News
    News

    EBA Guidance on Impact of CRR Quick-Fix on Reporting and Disclosures

    EBA revised the draft implementing technical standards on supervisory reporting as part of the reporting framework 3.0.

    August 11, 2020 WebPage Regulatory News
    News

    ECB Examines ICAAP Practices of Banks in EU

    ECB published report that presents a summary of the analysis conducted on the internal capital adequacy assessment process (ICAAP) practices of a sample of 37 "significant" banks.

    August 11, 2020 WebPage Regulatory News
    News

    EC Proposes to Amend Rules for Financial Benchmarks

    EC published a proposal for a regulation that amends the Benchmarks Regulation (2016/1011) regarding the exemption of certain third-country foreign-exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation.

    August 11, 2020 WebPage Regulatory News
    News

    PRA Suspends Relevant Guidance Levels on Fixed Rate Lending Limits

    PRA published a letter from Mel Beaman, the Director for UK Deposit Takers, to suspend the relevant guidance levels on fixed rate lending limits in the “Specialist Sourcebook” for an initial period of six months, running from August 01, 2020 to January 31, 2021.

    August 11, 2020 WebPage Regulatory News
    News

    BoE Provides Reporting Update on Form AS and Form FV

    BoE updated the known issues document for the statistical reporting Forms AS and FV.

    August 10, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5671