The Single Resolution Board (SRB) unveiled, on Wednesday 13 July, a first-ever assessment of the resolvability capabilities of the banking sector within the euro area Banking Union, based on data from 2021.
Our assessment shows “aggregate information about the progress being made, and where there is still room for improvement”, said its Chair, Elke König, during a dialogue in the European Parliament’s Committee on Economic and Monetary Affairs. Noting an “overall satisfactory” level of preparation by the banking sector, it considered that “further efforts are needed” in the following areas: - liquidity in resolution; - management information systems, especially for the purpose of valuing banking assets; - business reorganisation, especially in the sale of corporate assets.
According to Ms König, banks are “overall on track in meeting the 2024 deadline” for holding the minimum requirement for own funds and eligible liabilities (MREL) targets, despite “a few outliers” that are being closely monitored.
According to the assessment, most of the banks in the SRB’s remit - 82% of the total number of banks representing 97% of total risk exposure - are earmarked for resolution. Liquidation is planned for 18% of the banks, which account for 3% of total exposure at risk. Most of them are public development banks and smaller banks with a specific business model.
See the SRB’s assessment: https://aeur.eu/f/2m4
Ms König also welcomed the fact that the EU General Court validated the resolution process of the Spanish bank Banco Popular (see EUROPE 12963/22). She again referred to the break-up of the European subsidiaries of the Russian bank Sberbank as a reminder of the importance of harmonising national insolvency regimes (see EUROPE 12922/15).
EDIS. As for the completion of the Banking Union, she welcomed the Eurogroup’s interest in moving forward with strengthening the European framework for banking crisis management, provided that this approach does not lead to a “renationalisation” of deposit protection (see EUROPE 12974/10). The Eurogroup has “still not planned” to set up a European Deposit Insurance Scheme (EDIS), she said. (Original version in French by Mathieu Bion)