According to the audit completed by the National Audit Office of Finland (NAOF), the Financial Stability Authority (FFSA) is well placed to carry out bank resolution tasks. The results of the audit confirm the view that the Authority can prepare resolution plans with enough certainty and in an independent manner, in line with the objectives set for the resolution mechanism of the EU's banking union.
“The Authority has pursued the preparation of bank resolution plans in a consistent manner and developed its capability to act credibly and cost-effectively in the event of a crisis affecting any institution. The FFSA's preparedness to carry out national resolution tasks has now also been confirmed by the nation's highest independent audit authority,” states Tuija Taos, FFSA Director General.
In the first performance audit on resolution planning, the NAOF commends the FFSA for having drawn up resolution plans for all banks it is responsible for (LSIs) and for the fact that these plans largely cover the topics recommended. The NAOF recommends that the FFSA clarify the resolution plans regarding the topics of information and communication plans and reminds that cooperation between various authorities is required in crisis management pertaining to the financial sector. The recommendations of the NAOF's performance audit are in line with the FFSA's action plan.
“Over the next years, in accordance with the action plan adopted for the Authority, resolution work will delve even deeper into bank- and group-specific characteristics. This is particularly important from the perspective of facilitating the resolvability of the institutions, which is one of the operational dimensions of the banking union, states Taos.
The Authority has already intensified inter-authority cooperation, for example, with the Financial Supervisory Authority (FIN-FSA) by utilizing existing connections to a database for banks’ financial reports.
“The memorandum of understanding on the exchange of information between the FFSA and FIN-FSA was adopted in June 2019, and the Authority has recently begun the preparation of a memorandum of understanding on the exchange of information and cooperation with the Bank of Finland. The Authority will continue determined actions to enhance cooperation between various authorities in order to ensure adequate resolution capabilities,” says Taos.
NAOF Conclusions and recommendations 3/2020: Operations of the Financial Stability Authority as part of the banking union’s Single Resolution Mechanism
NAOF full report in Finnish: VTV Tarkastuskertomus 3/2020: Rahoitusvakausviraston toiminta osana pankkiunionin yhteistä kriisinratkaisumekanismia
Further information:
FFSA Director General Tuija Taos ([email protected])
