EU resolution authorities announcements on the coronavirus situation
The Single Resolution Board (SRB) and the European Banking Authority (EBA) have made initial decisions on relief measures concerning resolution planning. These policy decisions are part of European exceptional measures to support the operating capability of banks under challenging circumstances as well as to react to financial difficulties caused by the coronavirus situation. The Financial Stability Authority (FFSA) will take these decisions into account in its activities.
Extension of near-term reporting deadlines
The EBA has announced decisions on the possibility to offer leeway on report submission deadlines based on certain EBA reporting standards. The purpose of these temporary reporting relief measures is to ensure an adequate level of reporting to support resolution planning, while providing institutions with the possibility to focus on their critical functions under the exceptional coronavirus situation. The SRB will inform credit institutions under its competence on the report-specific application of the relief measures, and the FFSA will communicate with institutions under its direct remit.
Approach adopted by the SRB to significant institutions
The SRB is ready to consider on an institution-specific basis measures to ease the operational and administrative burden of institutions under its remit.
According to letters submitted to banks, the SRB will apply a pragmatic and flexible approach, besides regular data collection, to other information as well as information and data requests related to resolution planning, and the related deadlines may be postponed subject to separate agreement.
The SRB is prepared to use its discretion and flexibility allowed by the regulatory framework in making bank-specific MREL decisions. Based on individual assessment, this could be done in particular by adjusting the transitional periods for meeting MREL, or by taking the reductions of additional capital buffer requirements made by other authorities into account in the MREL level. One should bear in mind that MREL is a bank-specific requirement, and thus its adjustment always requires individual assessment.
The SRB has also published a final Expectations for banks document after a consultation with the sector. The document describes the capabilities banks are expected demonstrate in order to show that they are resolvable. The SRB states that it is prepared to show more flexibility also in this respect when assessing the capability of an individual bank to meet the requirements as part of resolution planning.
FFSA's approach to institutions under its direct remit
The FFSA finds the flexibility measures announced by the SRB and EBA justified, and it will apply similar practices to institutions under its direct remit, as applicable. The measures are also in line with those announced by banking supervision authorities to support banks’ capability to keep funding companies and households in the current difficult situation.
“The Financial Stability Authority monitors developments in the banking sector in close cooperation with the SRB, EBA and domestic authorities. The present policy decisions on flexibility measures are warranted. They do not endanger the operational preparedness of resolution authorities, and they have not been made by compromising bank resolvability”, states Tuija Taos, Director General.
Links:
SRB Elke König: An extraordinary challenge: SRB actions to support efforts to mitigate the economic impact of the COVID-19 outbreak
SRB letter to banks: Letter to banks under the SRB's remit on potential operational relief measures related to the COVID-19 outbreak
SRB Expectation for banks release: SRB publishes key bank resolution policy: Expectations for Banks
EBA statement: EBA provides additional clarity on measures to mitigate the impact of COVID-19 on the EU banking sector
Further information:
FFSA Director General Tuija Taos ([email protected])
