Featured Product

    SRB Chair Speaks About Focus Areas of the Upcoming SRB Policy

    January 17, 2019

    While speaking at the BPFI Conference in Dublin, the SRB Chair Elke König discussed the role of SRB, which is primarily to end the concept of "too-big to fail." She described where SRB fits into the overall regulatory structure in EU, before elaborating on the policy areas for the coming year.

    According to Dr. König, one of the fundamentals in making banks resolvable is the building up of loss-absorption capacity. Recently, SRB published a new policy document on MREL. In 2018, SRB split the cycle for resolution planning into two waves. This has followed a transitional two-step approach to the MREL-setting process. This recent policy applies to the second wave of resolution plans, which are those of the most complex groups. The first part of this two-wave process was published in November 2018. The first part covered banks that did not have binding targets—those without presence outside the Banking Union. SRB will, therefore, review its policy for MREL-setting for further updates in 2019 on the basis of the publication of the Banking Package in the Official Journal of the European Union, with the aim of charting a consistent path and preparing banks to transition to the new regime as well as to reflect any change necessary due to those requirements potentially coming into force in 2019.

    While the 2018 SRB policy follows a number of the elements defined in the 2017 policy, some new elements are added into the 2018 policy. There are three elements of note—namely, location of eligible resources, subordination, and setting of MREL at the individual level. The resolution plans are now in place for all of institutions and the work of SRB has begun to focus on fine-tuning each plan to ensure that it is truly ready to be sprung into action at short notice. "Banks need to build up the required MREL but they also need to develop the playbook on how to operationalize a write-down or bail-in." In this context operational continuity has been considered one of the priorities of 2018 resolution planning cycle. With specific regard to the Irish context, it is worthwhile to mention that there are some domestic banks that have UK subsidiaries, for which the PRA requirements on operational continuity apply since January 01, 2019. However, the banks have taken an overarching group-wide approach to also meet the SRB expectations on operational continuity. She highlighted that the same approach is followed by UK banks with subsidiaries in Ireland, where SRB is the host authority, to ensure that operational continuity in resolution will be achieved on a group-wide basis and not just for group entities in the UK.

    She added that part of the SRB resolution planning involves making sure that in times of crisis, operations can continue normally. Irrespective of the service delivery model adopted, banking groups are expected to structure their operational arrangements to facilitate the continuity of critical services in resolution. This particularly requires the following:

    • Undertake a comprehensive identification and mapping of critical services to critical functions and core business lines and an adequate documenting of contractual arrangements and service-level agreements
    • Maintaining access to key operational assets (such as IT infrastructure) and mitigating key staff departing
    • Achieving resolution-resilient contractual service provisions
    • Ensuring financial resilience of service provision
    • Ensuring appropriate governance arrangements

     

    Related Link: Speech

    Keywords: Europe, EU, Ireland, Banking, Loss Absorbing Capacity, MREL, Operational Continuity, Resolution Planning, SRB

    Related Articles
    News

    APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness

    APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).

    December 02, 2021 WebPage Regulatory News
    News

    EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance

    The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).

    December 01, 2021 WebPage Regulatory News
    News

    FSB Sets Out Good Practices for Crisis Management Groups

    The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.

    November 30, 2021 WebPage Regulatory News
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Updates Timeline for Implementation of Certain Basel Rules

    Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.

    November 29, 2021 WebPage Regulatory News
    News

    EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR

    EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.

    November 29, 2021 WebPage Regulatory News
    News

    FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR

    The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Capital Adequacy Standards for Banks

    The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.

    November 29, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.

    November 29, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7751