SRB published a position paper on its expectations about the resolvability of banks in the context of Brexit. The position paper focuses on expectations in six key areas: minimum requirement for own funds and eligible liabilities (MREL) eligibility, internal loss absorbency, operational continuity, access to financial market infrastructures, governance, and management information systems.
In the context of Brexit, SRB reiterated its core requirements in the interest of transparency. They do not preclude future SRB policy development. The expectations set out in this position paper are aligned with the working priorities communicated on an individual basis to banks that are already under the SRB remit. The requirements apply to Banking Union banks, be it either banks with significant activities in third countries or Banking Union subsidiaries of third country banking groups. These banks include the following:
- Groups that are headquartered in the Banking Union and have significant business or operational activities in third countries or will maintain such activities in the UK post Brexit (including but not limited to issuance of debt instruments under UK law)
- Subsidiaries, under the remit of SRB, of groups headquartered in the UK or in third countries, which have significant business or operational activities in the Banking Union
As a result of the UK leaving the EU, some UK or third-country banking groups have decided to relocate their UK-based activities to the EU27 or to increase the extent or scope of existing activities therein. Also, some banks under the SRB remit may have significantly increased business or operational activities in third countries. SRB and the Supervisory Board of ECB are cooperating closely to ensure the requests of both authorities are aligned and conveyed to banking groups coherently and effectively. The elements presented in the position paper are consistent with the EBA Opinions on Brexit (EBA/Op/2018/05 and EBA/Op/2017/12) and in line with international standards on resolvability.
Keywords: Europe, EU, Banking, Brexit, Resolvability, MREL, Loss Absorbency, FMI, Banking Union, SRB
Previous ArticlePRA Proposes Reporting Amendments to Pillar 2 Liquidity Framework
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.
The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.
The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.
The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).
The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.