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
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).