Featured Product

    SRB Issues Guidance on Liquidity and Funding in Resolution

    April 30, 2021

    SRB published new guidance on liquidity and funding in resolution. The guidance focuses on the first dimension of the SRB Expectations for Banks—that is, the estimation of liquidity needs— and aims to enhance banks’ resolvability and preparedness for a potential resolution. Banks will be assessed on this element in the 2021 resolution planning cycle. In 2022, SRB will issue further guidance for the two remaining elements in the SRB Expectations for Banks, which will be phased in over the next years.

    The guidance was developed to support banks’ first-time implementation of the liquidity policy in the 2021 resolution planning cycle and will be updated over time, as deemed necessary. In line with the scope of the SRB Expectations for Banks, this guidance is aimed at banks under direct SRB remit, for which the strategy is resolution. While the guidance is general in nature, its application to each bank may be adapted to individual specificities based on a dialog between each bank and its internal resolution team, taking into account the proportionality principle. This guidance is structured into the following sections that cover the key areas that will constitute the benchmark for assessment in 2021:

    • The first section focuses on the identification of key liquidity entities and main liquidity flows in resolution. Banks are expected to identify their key liquidity entities in resolution and to explain why these entities are expected to be relevant for liquidity in resolution, or not. 
    • The next section focuses on the assessment of the key drivers of the liquidity position in resolution. Banks are expected to include, in their assessments, an explanation of the methodology used for assigning the scores and a description of the evolution of the magnitude of each liquidity driver over the time horizon considered. To identify the key drivers of the liquidity position in resolution, banks can build on the risk identification performed in the Internal Liquidity Adequacy Assessment Process (ILAAP) and in the recovery plan. However, banks are expected to consider how risks identified in a going concern framework will change in a resolution scenario, reflecting the effects of the failure of the bank and the resolution actions.
    • The third section focuses on the methodologies for estimation of liquidity position in resolution.
    • The final section provides guidance for the implementation of the scenario analysis to performed in 2021.

     

    Related Links

    Keywords: Europe, EU, Banking, Resolution Planning, Liquidity Risk, Resolution Framework, Liquidity in Resolution, SRB

    Featured Experts
    Related Articles
    News

    PRA Proposes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    PRA proposed rules (in CP12/21) for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA).

    June 21, 2021 WebPage Regulatory News
    News

    ECB Extends Leverage Ratio Relief for Banks Until March 2022

    ECB Banking Supervision announced that euro area banks it directly supervises may continue to exclude certain central bank exposures from the leverage ratio until March 2022.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Treatment of Credit Valuation Adjustments

    OSFI decided to increase the Domestic Stability Buffer from 1.00% to 2.50% of total risk-weighted assets, with effect from October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    HKMA Requires Banks to Submit Plans for Fintech Adoption

    HKMA is requesting banks to participate in a tech baseline assessment, which forms part of the HKMA Fintech 2025 strategy.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Operational Risk Capital Data Management Expectations

    OSFI published two documents to consult on the management of operational risk capital data for institutions required, or for those applying, to use the Basel III standardized approach for operational risk capital in Canada.

    June 18, 2021 WebPage Regulatory News
    News

    NGFS on Addressing Financial Stability Issues from Biodiversity Loss

    The NGFS Study Group on Biodiversity and Financial Stability published a Vision paper exploring the case for action in addressing the financial stability concerns arising from biodiversity loss.

    June 18, 2021 WebPage Regulatory News
    News

    ACPR Publishes CREDITIMMO Version 2.3.0 Taxonomy for Banks

    ACPR published the final version of CREDITIMMO 2.3.0 taxonomy for the decree of October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    EC Prolongs Italian Guarantee Scheme for Non-Performing Loans

    EC, has approved, under the EU State Aid rules, the fourth prolongation of the Italian guarantee scheme to facilitate the securitization of non-performing loans.

    June 18, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Temporary Collateral Easing Measures

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

    June 17, 2021 WebPage Regulatory News
    News

    EIOPA Releases Report on Artificial Intelligence Governance Principles

    EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.

    June 17, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7128