SRB Issues Guidance on Bail-In for International Debt Securities
SRB published a guidance document on the elements that banks should consider for the implementation of the bail-in with respect to the international bearer debt securities issued by and safekept in the international central securities depositories (ICSDs), Euroclear Bank (EB), and Clearstream Banking Luxembourg (CBL). The guidance document has been developed based on discussions with the ICSDs. Banks are expected to reflect the content of this document in their bail-in playbooks as from 2021, in accordance with the SRB Expectations for Banks document. SRB also published a separate Annex II in the form of an Excel spreadsheet containing different templates for each relevant scenario with respect to the information that the ICSDs will need to receive to perform a write-down and/or conversion to reflect the bail-in in the accounts of their participants.
The guidance sets out elements that banks should consider with regard to the write-down and conversion of international bearer debt securities (Eurobonds) issued by and safekept in the ICSDs. These securities represent about 30% of the liabilities (in the form of securities) of banks under SRB remit. The document explains the role of ICSDs in a bail-in, the stakeholders involved, processes and steps to follow, data and information requirements, communication timelines, and channels used. The document is based, where possible, on the existing market practices and operational rules supporting the execution of the relevant corporate actions. The published document, however, does not address the bail-in execution steps for instruments issued and safekept in the local (national) CSDs (for example, shares, other instruments of ownership, and domestic bonds), as performed by these local CSDs
This document should be read in conjunction with the previously published guidance on bail-in playbooks, which covers the identification of instruments, internal and external execution processes, and the provision of bail-in data points. The document aims to:
- provide a better understanding of the procedures the ICSDs would apply in the case of the bail-in of international bearer debt securities for which the ICSDs act as issuer CSDs. Any actions undertaken by the ICSDs in respect of domestic securities, in their role of investor CSDs, will reflect events taking place on the local market.
- provide information to banks and resolution authorities across jurisdictions about how the bail-in of such instruments would be reflected in the books of the ICSDs.
- support banks in preparing their bail-in playbooks, particularly in respect of securities issued and safekept in the ICSDs.
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Keywords: Europe, EU, Banking, Resolution Planning, Basel, Banking Union, Resolution Framework, BRRD, Bail-In, CSD, SRB
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