Featured Product

    EBA Advice on Review of Crisis Management/Deposit Insurance Framework

    October 25, 2021

    The European Banking Authority (EBA) published an advice to the European Commission (EC) on funding in resolution and insolvency as part of the review of the crisis management and deposit insurance (CMDI) framework. The advice is in response to an EC Call for advice to EBA on funding in resolution and insolvency. The EBA response provides a quantitative analysis on the capacity of banks to access available sources of funding under the current framework and under various creditor hierarchies and with regard to the minimum requirement for own funds and eligible liabilities (MREL).

    EBA response provides a descriptive analysis on the capacity of banks to access resolution financing arrangements based on banks’ balance sheets and their business models; it also provides an analysis based on a modeling approach to simulate crisis scenario. The descriptive analysis shows change to the internal loss-absorption capacity of banks under four scenarios of depositor preferences compared to the current creditor hierarchy applicable in each member State. The analysis, whose findings are presented under several different capital depletion scenarios, draws two main conclusions:

    • Preferring deposits to other ordinary unsecured claims increases the number of banks that are able to meet the requirements to access resolution financing arrangements without the bail-in of any type of depositors.
    • A single-tier depositor preference comes with the highest impact on covered deposits and the highest contributions from deposit guarantee schemes compared to the other policy options and the current situation.

    The modeling approach that simulates an economic scenario similar to the global financial crisis confirms the findings. The report also investigates the issue of market access for MREL instruments for small and medium-size banks. A limited number of these institutions had not yet issued a senior MREL eligible instrument or the additional tier 1/tier 2 instruments as of end-2019. The response provides a strong quantitative basis and evidence to inform the EC work while it does not provide policy advice. In light of the simplifying assumption and data sample limitation, the findings of this analysis should be read with caution.

     

    Related Links

    Keywords: Europe, EU, Banking, Resolution Planning, MREL, Deposit Guarantee Schemes, Deposit Insurance, Crisis Management Framework, Resolution Funding, EBA

    Related Articles
    News

    EBA Launches Stress Tests for Banks, Issues Other Updates

    The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.

    January 31, 2023 WebPage Regulatory News
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8700