SRB Chair Elke König issued a letter to banks outlining the potential operational relief measures related to COVID-19 outbreak. In an article, she further highlights that SRB, together with the national resolution authorities, will postpone less urgent information or data requests related to the upcoming 2020 resolution planning cycle. However, the letter highlights that the Liability Data Report, the Additional Liability Report, and the Minimum Requirement for own funds and Eligible Liabilities (MREL) quarterly template are essential reports and are expected to be delivered on time by banks. SRB will also take note of the measures adopted by authorities to provide capital relief to banks in support of the economy. This will be reflected in the future MREL decisions of SRB.
In addition, SRB continues to carefully monitor the market conditions and will assess the potential impact on transition periods needed for the build-up of MREL. The letter highlights that SRB will carefully monitor market conditions in the next months and analyze the potential impact on transition periods needed for the build-up of MREL. SRB is ready to use its discretion and the flexibility given by the regulatory framework to adapt transition periods and interim targets applied to banking groups as well as to adjust MREL targets in line with capital requirements, with particular reference to capital buffers. SRB will assess possible leeway in submission dates for other reports, such as those related to Critical Functions and Access to financial market infrastructures. SRB will continue its work on resolution planning and the preparation for issuing 2020 MREL decisions according to the set deadlines in early 2021.
The letter encourages banks to stay in close contact with internal resolution teams. In light of the challenges posed by resource constraints and adverse market conditions, the internal resolution teams will assess difficulties in achieving work program updates and in submitting other deliverables on an individual basis. Needless to say, all banks are expected to substantiate their requests and identify mitigating actions to continue progress toward resolvability. SRB supports the steps that ECB, Single Supervisory Mechanism, and national competent authorities are taking to help banks deliver their services and to keep lending. The resolution framework and the build-up of MREL will be important tools to help support the economic recovery and a strong banking sector.
Keywords: Europe, Banking, MREL, Capital Requirements, Internal Resolution Teams, Liability Data Report, Resolution Framework, Elke Konig, COVID-19, Reporting, SRB
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