BaFin Issues Circular on Minimum Requirements for Implementing Bail-In
BaFin published the final Circular 05/2019 that covers the minimum requirements for implementing a bail-in for supervised institutions. The circular contains minimum requirements for information to be provided and for the technical and organizational resources needed to ensure the provision of information. These requirements are important prerequisites for a swift and precise implementation of the Write Down and Conversion of Capital Instruments (WDCCI) power and the bail-in tool pursuant to Sections 89 and 90 of the German Act on the Recovery and Resolution of Institutions and Financial Groups and Articles 21 and 27 of Single Resolution Mechanism Regulation (SRMR).
The circular is addressed to all institutions under the responsibility of BaFin as national resolution authority, provided that BaFin has informed the institutions in the context of resolution planning that the requirements have to be compiled with. The circular was submitted for consultation from February to March 2019. In the context of resolution planning, the resolution authority must examine the resolvability of institutions and groups, improve resolvability, and remove impediments to resolvability, if necessary. This includes examining whether a selected resolution strategy is feasible and whether there are potential grounds for refusal. Among other things, it must be examined whether
- Management information systems are able to provide the information that is essential for effective implementation of the institution at any time, even under the rapidly changing conditions
- An institution is able to provide the information necessary to determine the amount of the required write-down and/or recapitalization
The circular also supplements the information requirements of the Liability Data Reporting (LDR) of BaFin but does not replace them. Information for BaFin LDR template and the processes for preparation of this template can be used as a basis. However, information from the BaFin LDR template must be supplemented, first, because not all the necessary information relevant to decision-making with regard to WDCCI power and bail-in tool is taken into account. Second, in contrast to the BaFin LDR template, the bail-in information must be provided ad hoc and at short notice.
Related Links
Keywords: Europe, Germany, Banking, Minimum Requirements, Bail-In, Resolution Planning, Reporting, BaFin
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
MAS Revises Guidelines on Margin Requirements for OTC DerivativesNext Article
EBA Single Rulebook Q&A: Third Update for June 2018Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
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).
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.
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.
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.
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.