Featured Product

    Elke König of SRB Outlines Priorities for 2020

    December 03, 2019

    The SRB Chair Elke König addressed the ECON Committee of the European Parliament on the status of the current priority areas for SRB and elaborated on the SRB priorities for 2020, highlighting that implementation of the Banking package will be a major priority for the months ahead. She highlighted that the Banking Package strengthens the resolution framework, but also poses implementation challenges for SRB. The key tasks on the agenda include finalization of the new Minimum Requirement for own funds and Eligible Liabilities (MREL) policy by the second quarter of 2020, finalization of the European Deposit Insurance Scheme during this parliamentary term, continued progress toward resolvability assessment, and finding a solution for liquidity in resolution.

    The building up of MREL is very important for resolution planning; therefore, SRB has taken a gradual, multi-year approach to MREL, with the goal of maintaining proportionality in the system while preserving a level playing field and upholding high resolution standards across the Banking Union. In the last two resolution planning cycles, SRB has taken binding MREL decisions at consolidated and individual levels. By the end of 2019, SRB will have adopted decisions with MREL targets at the consolidated level for approximately 83% of the banks with resolution plans. Even though the revised Bank Recovery and Resolution Directive (BRRD2) and the Single Resolution Mechanism Regulation (SRMR2) only kick in from December 28, 2020, SRB has already advanced in revising its MREL policy with a view to discuss new policy elements with the participants of  the Single Resolution Mechanism and with a view to consulting the industry in early 2020. The goal is to have the new MREL policy ready by the second quarter of 2020. This would allow SRB to start applying it in the course of the 2020 resolution planning cycle and to take MREL decisions based on the new legal framework in the first or second quarter of  2021, when SRMR2 will be applicable and when member states should have transposed the BRRD2.

    The SRB Chair pointed out that the new legislation is complex and the resulting framework not only requires banks to continue on their path toward resolvability, but also to follow stricter rules for MREL. The new framework requires firmer conditions for instruments to be considered MREL-eligible; requires a number of banks to meet higher subordination requirements; and calls for banking groups to comply with the internal MREL requirements. SRB is working with the national resolution authorities and is in touch with EC, ECB, and EBA. However, recent experience shows that it will inevitably take some time for authorities to overcome the interpretation and implementation issues. This is another argument for the step-by-step introduction of the new framework, since it is already clear that the level two texts of EBA will be delayed.

    Another challenging task that is very high on the SRB agenda is the resolvability assessment. Based on these ongoing efforts, SRB is revising its internal policy on resolvability assessment, to integrate an overall consistent resolvability assessment into the upcoming resolution planning cycle for 2020. Concretely, SRB envisages the creation of a "heat-map" classifying banks in accordance with progress made on each resolvability condition and the relative impact this progress has on the feasibility of the preferred resolution strategy. An area where improvements need to be made is the need for a better alignment between resolution and insolvency, including a bank liquidation regime or harmonized license withdrawal process. She added that a solution for liquidity in resolution is still not in sight. In 2020, SRB continue to increase the Single Resolution Fund while it is hoped that the details around the backstop to the Fund can be worked out and hopefully progress can be made soon—perhaps even in tomorrow’s meeting of the EuroGroup. Finally, SRB would like to see more work to complete and strengthen the Capital Markets Union and hopes that an agreement can be reached on the European Deposit Insurance Scheme, which is the third and final pillar of the Banking Union, during this parliamentary term. 

     

    Related Link: Speech

    Keywords: Europe, EU, Banking, BRRD, Resolvability Assessment, Banking Package, MREL, Resolution Framework, BRRD2, SRMR2, Single Resolution Fund, SRB

    Related Articles
    News

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News
    News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News
    News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News
    News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News
    News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8952