Boštjan Jazbec of SRB spoke in Munich about the data information system requirements from a resolution perspective. He briefly explained how SRB and the resolution regime fit into the regulatory framework. Then, he described SRB requirements in terms of data reporting and what has bee achieved so far. Next, he focused on the ongoing work at SRB and the resulting data requirements, before looking at what is ahead in the coming months. He also informed that the EBA technical standards of uniform reporting templates, under the revised Bank Recovery and Resolution Directive (BRRD 2), are expected to be finalized by mid-2020.
Mr. Jazbec explained that bank supervisors look at banks from a going-concern perspective whereas resolution authorities focus on the gone-concern perspective. In this context, he discussed the Liability Data Report,the resolution planning template, and the standardized template related to the identification of critical functions. Currently, the focus is on the reporting of standard resolution templates on a year-end basis. In the future, however, banks will be required to ensure their capability to provide these data on request. Thus, banks have to further adjust their data information systems.
In terms of the ongoing SRB work and the resultant data reporting requirements, the first major element is the recent revision of the legal framework of the EU resolution regime by law makers. This banking package will trigger substantial changes of the SRB reporting needs and will, therefore, have an impact on data system requirements. BRRD 2 will introduce new reporting requirements, for which EBA is developing technical standards on uniform reporting templates. EBA is expected to finalize these standards by mid-2020. SRB, however, needs to bridge the gap in the transitional period to facilitate a timely and effective transition toward the application of the new reporting framework. Therefore, SRB will frontload the future EBA implementing technical standards templates by launching a new data collection exercise in the transitional period. For instance, SRB will request additional data on loss-absorbing capacity and on internal minimum requirement for own funds and eligible liabilities (MREL), for example, to set the intermediate MREL targets. Thus, 2020 will see a further development of regulatory standards, implementing acts and the preparation by SRB, the national resolution authorities, and the banks under its remit for the application of the new rules.
The second major element that will impact SRB work is the decision to move from the two-stage resolution planning process 2018/19 to a new steady-state process. In 2020, SRB will re-align all banks under its remit to a uniform twelve-month resolution planning cycle. This new cycle will start in April, with banks‘ regular data reporting based on 2019 year-end data, and finish in March of the following year, with the approval of the resolution plan, including MREL decisions, followed by communication to the banks. This was necessary to take into account the new legal framework from 2020 with respect to the aim to ensure “fully-fledged resolution plans” and MREL decisions. The full operationalization of the SRB resolution strategies requires continuous improvements of bank data systems. To frame this process, SRB has defined a general approach that will guide banks in the right direction. For the 2020 resolution planning cycle, the phasing-in foresees three operational priorities for all SRB banks. These are:
- Operationalization of the bail-in tool
- Ensuring operational continuity in resolution
- Maintaining access to financial market infrastructures and their intermediaries ahead of, and during, resolution.
In the coming weeks, SRB will communicate further information on these three priorities. Based on that and the general expectations, banks will have to start their work and adjust their IT systems. For the operationalization of bank-individual resolution strategies, SRB will not rely on standardized templates. SRB will only communicate the general expectations and operational objectives that the data information systems have to fulfill. At the end of this year, SRB expects the first draft bail-in playbooks from all SRB banks and it will continue this work in 2020. At a later stage, SRB will request banks to perform dry runs on bail-in implementation to test, in particular, the readiness of data information systems of banks. The example “Bail-in Playbook“ should provide some background as to why SRB has chosen the above-described approach. In the end, only banks can ensure resolvability while the resolution authorities can only set the framework and evaluate whether there are substantive impediments to resolution that have to be removed. Mr. Jazbec concluded that, for good-quality resolution decisions, instant availability of up-to-date, reliable data is a necessity.
Related Link: Speech
Keywords: Europe, EU, Banking, Reporting, Implementing Technical Standards, Resolution Framework, Resolution Planning, MREL, Data Collection, SRB
Previous ArticleBDE Circular on Significance Threshold of Overdue Credit Obligations
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).