EC authorized, under EU State aid rules, the prolongation of a Danish resolution scheme for small banks with total assets below EUR 3 billion. The objective of the scheme is to facilitate the work of the Danish resolution authorities to wind up a small bank, should a concrete case and need arise for it. The scheme is open to banks that would be found to be in distress by the competent national authorities. The scheme is being prolonged until September 30, 2020. The scheme was initially approved in September 2010 and has been prolonged and amended several times since then, most recently in August 2018.
The objective of the scheme is to safeguard financial stability and minimize economic losses, when a bank becomes unable to meet the conditions set for its operation by the Danish Financial Supervisory Authority. The scheme provides for an orderly winding up of the failing bank, transferring its assets and part of its liabilities to a bridge bank to be set up under the aegis of the Danish Financial Stability Company. The Authority would provide capital, and, if necessary, liquidity to the bridge bank. EC found the scheme to be in line with the EU State aid rules, in particular the 2013 Banking Communication on crisis rules for banks and the EU banking rules. EC found the scheme to be in line with its Guidance Communications on state aid to overcome the financial crisis. In particular, the aid is limited to the minimum necessary to ensure an orderly winding-up.
Keywords: Europe, EU, Denmark, Banking, Financial Stability, Resolution, Small Banks, EC, DFSA
Previous ArticleHKMA Updates Liquidity Facilities Framework for Banks
PRA published a set of questions and answers (Q&A) covering common queries regarding residential and commercial property valuations, for the purpose of the Capital Requirements Regulation (CRR), during the period of disruption caused by COVID-19 pandemic.
EBA published guidelines on loan origination and monitoring, which bring together prudential standards and consumer protection obligations, along with the anti-money laundering and the Environmental, Social, and Governance (ESG) considerations.
EBA published a consultation paper on the draft amended regulatory technical standards on own funds and eligible liabilities.
EBA published a report on convergence of supervisory practices in 2019.
IOSCO proposed updates to its principles for regulated entities that outsource tasks to service providers.
MAS announced that the first phase of the Veritas initiative will commence with the development of fairness metrics in credit risk scoring and customer marketing.
BoE published the Statistical Notice 2020/4 to update the buy-to-let (BTL) Phase 2 and Phase 3 definitions for the Interest Rate Type data item.
FSI published a brief note that examines challenges facing the banking sector as a result of the payment deferral programs put in place to support borrowers affected by the COVID-19 pandemic.
RBNZ published the financial stability report for May 2020. This review of the financial system in the country highlights that the economic disruption associated with COVID-19 will present challenges to the financial system.
PRA published the policy statement PS14/20, which contains the supervisory statement SS1/20 and the feedback to responses to the consultation paper CP22/19 on expectations for investment by firms in accordance with the Prudent Person Principle, or PPP, as set out in the Investments Part of the PRA Rulebook.