SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years. SRB details work priorities for 2021 and highlights that it will work, for the first time, with an enlarged Single Resolution Mechanism that includes Bulgaria and Croatia as two new member states. As a key priority for the coming years, SRB will fully operationalize the use of resolution tools and their combined use. In this regard, more work is planned particularly on transfer tools. Another key priority for SRB in coming years is to call for, and support, the completion of the Banking Union.
The key work priorities are in the following areas:
- Achieving resolvability of SRB banks and less significant institutions—In 2021-2023, SRB will steer the banks’ work to meet the "Expectation for Banks" and become resolvable. SRB will subsequently review long-term work programs (to be delivered by banks in early 2021) and their resolvability self-assessments. SRB has already drafted resolution plans for all SRB banks. Therefore, the focus for 2021-2023 will be to (update and) operationalize the resolution plans and to make them truly actionable at short notice. SRB performs resolvability assessments as part of the annual Resolution Planning Cycle. In 2021-2023, such assessments will feed into a central “heatmap,” aimed to track individual banks’ progress and benchmark it across SRB banks.
- Fostering a robust resolution framework—Key areas of policy development for 2021-2023 are minimum requirement for own funds and eligible liabilities (MREL), Public Interest Assessment, and financial continuity framework. With respect to MREL, the priority is to refine the 2020 MREL policy to complete the implementation of the new rules in the Banking Package as they fall due. Financial continuity framework comprises policy work, for 2021 and 2022, on liquidity and funding in resolution and on solvent wind-down of trading books of banks. Other policy developments planned for 2021-2023 include work on resolution scenarios; resolvability assessment, including separability analysis and restructuring; resolution tools; ancillary powers; and moratorium.
- Preparing and carrying out effective crisis management—SRB will work to enhance its own procedures and documentation and to update and expand National Handbooks (that look at the implementation of resolution schemes). Moreover, SRB aims to refine its quantitative tools (for example, bail-in tool calculator, sale of business tool calculator, and crisis dashboard). This is supported by the overarching priority of maintaining an effective Information and Communication Technology (ICT) platform, aligning data sources, and expanding data available to the crisis management teams. To test crisis preparedness, the objective for 2021-2023 is to perform several “fully-fledged” and “technical” dry-runs.
- Operationalizing Single Resolution Fund—A key priority for 2021-2023 is the monitoring of the evolution of covered deposits, for the annual target-setting as well as to reach the overall target level of 1% of covered deposits. In 2021, SRB will work to calculate the individual 2021 ex-ante contributions, notifying the national resolution authorities as soon as possible and on-boarding two new participating member states (Bulgaria and Croatia) into the contributions cycle. SRB will also work to operationalize the Single Resolution Fund liquidity. Over 2021-2023, SRB will continue to analyze the optimal financing instruments for capital and/or liquidity support, covering any possible combination of resolution tools. This work will build on existing SRB procedures and past dry-runs.
Keywords: Europe, EU, Banking, Resolution Framework, MREL, LSI, Work Program, Single Resolution Fund, Banking Union, MREL Policy, Crisis Management Framework, SRB
Next ArticleUS Agencies Issue Statement on LIBOR Transition
EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.
MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.
ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.
EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).
PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.
The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.
FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.
OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.
To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).
HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.