Resolution planning: Legal framework and practical experience

Transcription

1 Resoution panning: Lega framework and practica experience Ewa Kima Deputy Genera Counse Singe Resoution Board Mata, June 9, 2017

2 TABLE OF CONTENTS 1. SRB s mission & tasks 2. Resoution panning 3. Credibiity & feasibiity of insovency proceedings 4. Identification of preferred resoution strategy 5. Determination of MREL 6. Impediments to resovabiity 7. Adoption of the resoution pan 8. Practica experience and chaenges 2

3 SRB S MISSION & TASKS The mission of the SRB is to ensure an ordery resoution of faiing banks with minimum impact on the rea economy and the pubic finances of the participating Member States of the Banking Union. The SRB together with the Nationa Resoution Authorities (NRAs) forms the Singe Resoution Mechanism. The SRB is directy responsibe for: FI - Significant banks Member States in the Eurozone Member States not in the Eurozone IE UK FR NL BE LU DK DE AT SE CS PL SK HU EE LV LT RO - Cross-border banking groups SRB s main tasks: - Resoution panning - Resoution action PT ES IT BG - Singe Resoution Fund (SRF) EL 3

4 RESOLUTION PLANNING Addressing impediments to resovabiity Assessment of feasibiity & credibiity of norma insovency proceedings RESOLUTION PLANNING If negative, identification of resoution strategy RESOLUTION PLANNING IS AN ITERATIVE PROCESS Identification of impediments to resovabiity Determination of MREL Assessment of feasibiity & credibiity of the preferred resoution strategy Resoution pans are to be drafted and updated at east annuay 4

5 CREDIBILITY & FEASIBILITY OF INSOLVENCY PROCEEDINGS 1. Insovency proceedings are credibe when there is no materia adverse impact on: ü financia market functioning and market confidence; üfinancia market infrastructures; üother financia institutions; üthe rea economy and in particuar the avaiabiity of critica financia services. 2. Insovency proceedings are feasibe when the entity: ühas systems that are abe to provide the information required by the deposit guarantee scheme, incuding on covered deposit baances; üis capabe of supporting the deposit guarantee scheme s operations, by distinguishing between covered and non-covered baances of deposits accounts. 5

6 IDENTIFICATION OF PREFERRED RESOLUTION STRATEGY RESOLUTION APPROACH Singe point of entry approach The appication of resoution powers by a singe resoution authority at the eve of a singe parent company or of a singe institution subject to consoidated supervision Mutipe point of entry approach The appication of resoution powers by two or more resoution authorities to regiona sub-groups or entities of a bank Different toos can be used to safeguard pubic interests, incuding the continuity of the bank s critica functions and financia stabiity, at minima costs to taxpayers. SALE OF BUSINESS Part or a of the shares or other instruments of ownership or assets, right and iabiities can be sod to a private purchaser RESOLUTION TOOLS Assets, rights and iabiities can be transferred to an asset management vehice, totay or partiay pubicy owned, if iquidation of the assets coud cause market disruption. ASSET SEPARATION TOOL BRIDGE BANK TOOL Part or a of the shares or other instruments of ownership or assets, right and iabiities can be transferred to a temporary entity. Liabiities can be written down and converted, pacing the burden on sharehoders and creditors of the bank rather than on the pubic. BAIL-IN FSB Guidance on deveoping effective resoution strategies 6

7 DETERMINATION OF MREL Ø In order to ensure the effectiveness of the bai-in too, entities shoud at a times meet a Minimum Requirement for own funds and Eigibe Liabiities, expressed as a percentage of the tota iabiities and own funds. Ø MREL shoud not exceed the amount sufficient to ensure that osses are absorbed and the capita requirements of the reevant entities restored to enabe them to continue being authorised and to operate with sufficient market confidence. The MREL determination is done on a case by case basis according to certain criteria: size, business mode, funding mode & risk profie extent of possibe DGS contribution; possibe significant adverse consequences for the financia system in case of faiure of the entity Eigibe iabiities are incuded when: issued and fuy paid up not owed to/secured to/guaranteed by the entity itsef their purchase not funded directy or indirecty by the entity itsef maturity is of 1 year not arising from a derivative not arising from covered or preferred deposits 7

8 IMPEDIMENTS TO RESOLVABILITY Identification of impediments to resovabiity: - structure and operations; financia resources; information; cross-border issues; ega issues. Measures to address impediments to resovabiity incude, inter aia, to require: - the revision of any intragroup financing agreements or drawing up of SLAs; - the divestment of specific assets; - the imitation/termination of specific activities; - changes to ega or operationa structures of the entity; - the issuance of eigibe iabiities or taking any other steps to meet the MREL requirements. Procedure: 1. Identification of substantive impediments, after consuting the supervisor 2. Preparation of report addressed to the bank, in cooperation with the supervisor 3. Proposa of possibe measures by the bank within four months 4. Assessment of the effectiveness of the proposed measures by the SRB, after consuting the supervisor 5. If negative assessment, requiring the bank to take specified measures 8

9 ADOPTION OF THE RESOLUTION PLAN (INVOLVING RESOLUTION COLLEGE) 9

10 PRACTICAL EXPERIENCE AND CHALLENGES 1. Information exchange and data quaity - Banks - Supervisory authorities and other reevant EU and nationa authorities 2. Cooperation and institutiona arrangements - At the eve of EU institutions - Within the Banking Union - Wider EU - Third countries 3. Novety and uncertainty - Precedent and new ega environment - Expertise 10

11 THANK YOU For more information, pease contact: