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    SRB Publishes Guidance on Implementation of Bail-In Tool

    August 10, 2020

    SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool. The documents include operational guidance on bail-in playbooks, a set of questions and answers (Q&A) for publication of bail-in guidance, and instructions for bail-in data sets, which are accompanied by an explanatory note. SRB developed these documents in close collaboration with the national resolution authorities. The documents have been published as a follow-up to the SRB Expectations for Banks document, which was published earlier in 2020. With these documents, SRB is providing banks with additional guidance, so that that they can proceed with the necessary operational steps to become prepared for a potential bail-in event.

    The operational guidance on bail-in playbooks compiles the main elements that banks are expected to consider for developing their bail-in playbooks to enable the timely and effective execution of the write-down and conversion of capital instruments and eligible liabilities, pursuant to Article 21 of the Single Resolution Mechanism Regulation or SRMR (Regulation No 806/20141) and the execution of the bail-in tool in resolution. The document on instructions for bail-in data set compiles the main elements that banks are expected to consider for establishing the required capabilities of the Management Information Systems to enable the timely and effective execution of the write-down and conversion of capital instruments and eligible liabilities. The explanatory note on bail-in data includes information about the predefined set of bail-in data defined in the document “SRB Bail-in Data Set – Instructions” and should be read in conjunction with the related SRB publications on bail-in implementation, such as the operational guidance on bail-in playbooks. The explanatory note aims to provide explanations with respect to the data required for the application of the bail-in tool. It specifies, among others, the SRB minimum expectations concerning liability data that a bank under resolution should provide to resolution authorities in an accurate and timely manner. It also elaborates on the required level of data quality and further considerations that need to be taken into account to ensure sufficient legal certainty while implementing the bail-in tool. 

    The published documents on bail-in playbook and data are subject to further revisions, including due to changes in the applicable EU legislation. The bail-in playbook is an internal document of banks, establishing a minimum set of objectives, processes, and governance structures to support the implementation of write down and conversion powers by national resolution authorities. The first versions of the bail-in playbook should focus on the time between the runup to resolution and the finalization of the internal and external execution after the resolution weekend. Future versions are expected to gradually expand this scope, potentially covering additional elements such as the arrangements to ensure the ability to provide a business reorganization plan. The playbook should thus provide a documentation of the preparation for the internal and external execution of write-down and conversion powers and the bail-in tool, conducted by the banks in cooperation with the Internal Resolution Teams in normal times.

     

     

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    Keywords: Europe, EU, Banking, Resolution Planning, Instructions, SRMR, BRRD, Resolution Framework, Bail-In Regime, Bail-In Dataset, SRB

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