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November 15, 2018

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

Since SRB has the mandate to ensure resolvability of all the banks under its remit, it expects all banks active in the Banking Union to meet a set of resolvability conditions. 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. As a result of the UK leaving the EU, certain UK or third-country banking groups have decided to relocate the current UK-based activities to EU-27 or to increase the extent or scope of the existing activities therein. Additionally, certain banks under the remit of SRB may have significantly increased business or operational activities in third countries.

SRB and the Supervisory Board of ECB are cooperating closely to ensure that the requests of both authorities are aligned and conveyed to banking groups coherently and effectively. The elements presented in the paper are consistent with the EBA Opinions on Brexit (EBA/Op/2018/05 and EBA/Op/2017/12) and are in line with the international standards on resolvability. In the context of Brexit, SRB reiterates its core requirements in the interest of transparency. They do not preclude future SRB policy development. The expectations in this paper are aligned with the working priorities individually communicated to the banks that are under the SRB remit.

 

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Keywords: Europe, EU, UK, Banking, FMI, MREL, Banking Union, Brexit, Resolution, ECB, EBA, SRB

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