Featured Product

    ECB Considers Guarantee Framework for Banks Coming Out of Resolution

    November 20, 2020

    ECB has compared the frameworks for liquidity provision under the bank resolution framework across jurisdictions and presented lessons learned from different frameworks for liquidity provision post-resolution. In conclusion, ECB is investigating the development of a guarantee framework, in the Banking Union, to allow banks coming out of resolution with limited collateral to access Eurosystem. It is expected that such public guarantees would protect the Eurosystem against losses, foster a single market for banks in the Banking Union, reduce the bank-sovereign nexus, and make the resolution framework of the Banking Union more credible. In another development, the ECB Governing Council adopted a revised version of the agreement on emergency liquidity assistance (ELA).

    The updated version of the agreement on ELA contains a technical amendment to Section 3.2(a)(i) to clarify that solvency assessments of financial institutions are performed by the prudential supervisor in accordance with the solvency definition for ELA purposes, as laid down in Section 4. ECB also specifies that the ELA agreement will be reviewed in the course of 2023. As per the ELA agreement, a credit institution is considered solvent for ELA purposes if:

    • Its Common Equity Tier (CET)1, Tier 1, and Total Capital Ratio as reported under the Capital Requirements Regulation (CRR) on an individual (if applicable) and consolidated (if applicable) basis comply with the harmonized minimum regulatory capital levels (namely 4.5%, 6% or 8%, respectively); or
    • There is a credible prospect of recapitalization—in case the above condition is not met, by which harmonized minimum regulatory capital levels would be restored within 24 weeks after the end of the reference quarter of the data that showed that the bank does not comply with harmonized regulatory minimum standards; in duly justified, exceptional cases, the Governing Council may decide to prolong the grace period of 24 weeks.

     

    Related Links

    Keywords: Europe, EU, Banking, ELA, CRR, Regulatory Capital, Basel, Resolution Framework, Guarantee Framework, ECB

    Featured Experts
    Related Articles
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR

    The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy

    The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8196