The Single Resolution Board and the Swiss Financial Market Supervisory Authority (FINMA) signed an arrangement for the exchange of information and cooperation in resolution planning and the implementation of such planning for financial institutions with operations in the Banking Union and Switzerland. SRB and FINMA confirm, through this arrangement, their commitment to strengthen cross-border resolvability and the intent to work together in planning and conducting an orderly cross-border resolution. SRB also published the operational guidance for banks on separability for partial transfer tools. This follows the publication of the SRB Expectations for Banks document, which sets out the capabilities the SRB expects banks to demonstrate to show that they are resolvable.
The operational guidance helps banks by providing more detail on how to concretely deliver the relevant information and analysis through the separability analysis report and an operational document called the transfer playbook. Separability is a broad concept relevant to all resolution strategies. Separability is defined as the bank’s ability to implement a transfer of legal entities, business lines, or portfolios of assets and liabilities at short notice to a third party. Separability allows SRB to execute, together with the national resolution authorities, a market transaction within a reasonable amount of time, to ensure the resolution objectives through the bank’s transfer, in due course, to a private owner or through an orderly wind-down. It is particularly relevant for banks for which the resolution strategy envisages a transfer tool, such as sale of business, asset separation tool, and the bridge institution tool. This concept allows SRB to access the necessary information and analysis from banks to make full use of resolution tools should a bank get into difficulty and to ensure, for example, that different arms of a banking group can be separated out with appropriate solutions applied. This will help ensure financial stability.
In addition, to comply with the expected deadline, separability work to operationalize partial transfer tools is also a general working priority during the 2022 resolution planning cycle for relevant institutions. Principle 7.2 in the Expectations for Banks document is particularly relevant for banks for which the resolution strategy envisages a transfer tool. It sets out the expectation for banks to deliver separability analyses by the end of 2023. In line with the Expectations for Banks, while the operational guidance is general in nature, its application to each bank may be adapted to individual specificities, taking into account the proportionality principle and based on a dialog between each bank and its Internal Resolution Team. The guidance is not exhaustive and may be subject to further SRB communications related to resolvability requirements for banks, for instance, to reflect any remaining alignment with guidelines at the EBA level on resolvability and transferability once these are finalized.
- Press Release on Cooperation Agreement
- Press Release on Guidance
- Operational Guidance (PDF)
- Expectations for Banks
Keywords: Europe, EU, Banking, Resolution Planning, Banking Union, Switzerland, Resolution Framework, Cross-Border Resolution, Separability Analysis, Transfer Playbook, SRB
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
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.
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.
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.
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.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
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.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.