The Single Resolution Board (SRB) published the resolution planning cycle booklet for 2022 and a summary of the April meeting among the financial authorities in U.S., European Union, and UK for regular coordination exercise on cross-border resolution planning. SRB also published the minimum requirement for own funds and eligible liabilities (MREL) dashboard for the fourth quarter of 2021; the dashboard shows that banks continue to build up MREL levels and the average MREL shortfall to the final 2024 targets including the combined buffer requirement reached 0.45% of the total risk exposure amount (or EUR 32.6 billion) for resolution entities, thus continuing the decreasing trend observed in the previous quarter.
The newly published booklet on resolution planning cycle informs stakeholders about the resolution planning activities of SRB and describes the main processes and phases of the resolution planning cycle. The resolution planning cycle aligns the resolution planning of the banks under SRB remit on the same twelve-month cycle running from April to March. In the 2022 cycle, SRB will focus its work with banks under its remit on three common priorities:
- Liquidity and funding in resolution—banks must ensure to have the capabilities to mobilize collateral to maximize liquidity sources in resolution.
- Separability and business reorganization plans—banks have to provide additional reports on the potential reorganization plans (required in the context of the open bank bail-in strategy) and on the transferability of parts of their business.
- Information systems and Management Information Systems (MIS) capabilities for bail-in and valuation data—all banks for which resolution is the preferred strategy are expected to conduct a bail-in dry-run and the self-testing exercise on MIS valuation by end 2022.
Additionally, as part of the policy implementation in 2022, SRB will
- Update its polices and operational guidance documents, among others
- Monitor closely the resolvability and preparation of the substantive impediments procedure for banks that show insufficient progress toward achieving resolvability in line with the SRB Expectations for Banks
- Conduct ongoing MREL monitoring to ensure build-up toward the final targets by the January 01, 2024 deadline and monitor the 2022 intermediate targets
- Develop deep-dive assessments for conducting future on-site inspections
- Start preparation for 2023 resolution planning cycle, taking into account that 2023 is the final year for all SRB banks to be fully resolvable, in line with the Expectations for Banks (Banks will receive bank-specific 2023 SRB priority letters in September 2022.)
- Press Release on Resolution Planning
- Resolution Planning Cycle Booklet (PDF)
- Press Release on MREL Dashboard
- MREL Dashboard (PDF)
- Press Release on Cross-Border Exercise
Keywords: Europe, EU, Banking, MREL, MREL Dashboard, Basel, Regulatory Capital, Reporting, Resolution Framework, G-SIB, Cross-Border Resolution, Resolution Planning, SRB, Subheadline
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