Reform of resolution legislation proceeds
The working group preparing an extensive review of legislation on credit institutions and resolution submitted its memorandum to the Ministry of Finance in June, and the memorandum was subsequently out for consultation until 23 August 2020. The Financial Stability Authority (FFSA), which had a representative in the working group, finds the proposals prepared by the working group within the specified schedule welcome and justified.
In its own statement, the FFSA suggested certain further amendments to clarify the implementation of the underlying directives. In addition, the FFSA proposed additional clarifications pertaining to the incomplete implementation of directives already in force, for example in terms of regulation concerning the transfer of deposit portfolios.
The main amendment concerning the Act on the resolution of credit institutions and investment firms is to complement regulation related to the minimum requirement of eligible liabilities (MREL) and to enact further powers to the resolution authority, for example to restrict an institution's profit distribution and suspend the execution of contracts.
The proposal prepared by the working group in the form of a government bill is currently being finalised by public officials within the Ministry of Finance, and the objective is to submit the bill in September-October to the Parliament for discussion. The Acts are intended to take effect on 1 January 2021.
Further information: Reima Letto, Head of the Resolution Unit ([email protected])