EC Report Reviews Application of BRRD and SRMR in EU
EC adopted a report that reviews the application of Bank Recovery and Resolution Directive (BRRD) and Single Resolution Mechanism Regulation (SRMR) in EU. These legal acts are key elements of the legislation that was adopted in the wake of the financial crisis and constitute the core building blocks of the Banking Union. Given that the two legislative instruments have thus far have been applied in a limited number of cases, the report concludes that more time is needed for their assessment before any amendments are proposed.
In its assessment, EC took stock of the implementation of the resolution legislation and its application to concrete banking cases. The legislation has been applied only in a very limited number of cases, out of which only one case concerned the resolution of an institution under SRMR. A number of these cases dealt with “legacy issues,” which accumulated during the financial crisis or before. Moreover, the provisions of the bail-in tool and the establishment of the Single Resolution Board became applicable only as of January 01, 2016. Additionally, other elements—such as resolution planning for larger and complex institutions and the provisions concerning MREL—require a phasing in to be fully implemented. Not to mention that certain crucial parts of the framework—including the provisions on Minimum Requirement for own funds and eligible Liabilities (MREL), moratorium powers, and the recognition of liabilities governed by third-country law—are still in the process of being amended and, once in place, transition periods will apply. After considering all these factors, the report concludes that more time is needed to fully assess the implications of the legislation.
EC will, however, continue to monitor the application of the resolution framework and further assess the identified issues. EC will also engage in a comprehensive discussion of the topics identified in this report with respect to BRRD and SRMR (as well as issues that may emerge from application of the resolution framework) with experts appointed by the European Parliament, member states, and all relevant stakeholders. This report has been prepared in accordance with the Article 129 of BRRD and Article 94 of SRMR, which require EC to review the application of the resolution framework and to submit a report to the European Parliament and the Council. The reports on the application of these legal instruments were due by June and December 2018, respectively. Due to the close links between these instruments, it was though to be appropriate to conduct a joint review for BRRD and SRMR.
Keywords: Europe, EU, Banking, BRRD, SRMR, MREL, Banking Union, Resolution Framework, SRB, EC
ECB Finds Banks Unprepared for Pillar 3 Climate Risk Disclosures
The European Central Bank (ECB) published results of the 2022 supervisory assessment of climate-related and environmental risk disclosures among significant institutions (103) and a selected number of less significant institutions (28).
NCUA Assesses Credit Union Exposure to Climate-Related Physical Risks
The National Credit Union Administration (NCUA) released a Research Note that examines the exposure of credit unions to climate-related physical risks. In a related development
EBA Issues Multiple Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) is seeking comments, until July 31, 2023, on the draft Guidelines on the proposed common approach to the resubmission of historical data under the EBA reporting framework.
EC Adopts Regulation on Own Funds, Issues Other Updates
The European Commission adopted Delegated Regulations on own funds and eligible liabilities, on requirements for the internal methodology under the internal default risk model
CDP Platform to Report Plastic-Related Impact, Issues Other Updates
The Carbon Disclosure Project (CDP) announced that its global environmental disclosure platform has enabled reporting on plastic-related impact for nearly 7,000 companies worldwide
IASB to Enhance Reporting of Climate Risks, Proposes IFRS 9 Amendments
The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements,
BIS Addresses Data Gaps and Macro-Prudential Policy for Climate Risks
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a brief paper that examines challenges associated with the use of macro-prudential policies to address climate-related financial risks.
FCA Sets Out Business Plan, Launches TechSprint on Greenwashing
The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets
UK Committee Sets Out Recommendations for Next Phase of Open Banking
The Joint Regulatory Oversight Committee (JROC), comprising the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) as co-chairs and the HM Treasury and the Competition and Markets Authority (CMA) as members
ECB Publishes Multiple Regulatory Updates for Banking Institutions
The European Central Bank (ECB) published the results of the 2022 climate risk stress test of the Eurosystem balance sheet,