Eurozone banking groups, whose debt issued under English law is not eligible, could benefit from an extended period of time to build up MREL assets that could be used in the event of an internal bail-in, the Single Resolution Council (SRB) said on Thursday 15 November in a document setting out its banking resolution expectations in the context of Brexit.
This document is addressed to banking groups covered by the banking union in the Eurozone and having significant commercial and operational activities in third countries, as well as subsidiaries in a third country with groups whose head office is located in the United Kingdom.
If banks present a MREL asset deficit as a result of the issuance of non-eligible British securities, the Single Resolution Council will consider "each situation on a case-by-case basis, while ensuring consistency across all banks under its remit". Such a situation "may entail an extension of the transitional periods" for the banks concerned, added the European authority.
Consistent with the European Banking Authority’s decision (see EUROPE 12048), the SRB Council's recommendations, in particular, call on banking groups to: - map their critical assets and services (buildings, intellectual property rights, etc.) ; - minimise their dependence on entities located outside the EU-27 for access to market infrastructures (payment systems, clearing houses) or, failing that, to conclude appropriate contracts for the continuation of their post-Brexit services; - adapt the group's governance in order to ensure optimal knowledge of internal procedures in the event of a banking resolution.
See the document: http://bit.ly/2OKqXVZ. (Original version in French by Mathieu Bion)