Similarly to 2024 - but with updated objectives - the three main priorities for 2025 of the European Banking Authority (EBA) when it comes to bank resolution are: operationalisation of their resolution tools, liquidity strategies in resolution, and management information system for valuation.
In a programme document published in mid-August, the European authority noted that most of the European banks concerned had reached their quantitative target for the issuance of ‘MREL’ assets that could be mobilised in the event of resolution. Nevertheless, it has indicated that it will closely monitor compliance with qualitative aspects relating to these assets, in particular the legal uncertainty arising from contracts for the issuance of ‘MREL’ assets concluded in third countries.
Regarding the operationalisation of bail-in tools, which aim to affect first the shareholders of a bank subject to resolution, the EBA notes the “low level” of preparedness by some market participants in the event of the suspension of the listing of an asset or for the issue of information prospectuses relating to the issue of new financial securities.
In addition, the national competent authorities will increase their level of testing to ensure that a bank holds sufficient liquid securities in the event of a bank resolution. Attention will be paid to the mobilisation of collateral, in particular assets not eligible for monetary policy operations. Work will continue on removing legal and operational obstacles to the introduction of moratoria.
Eligible banks have until the end of 2024 to set up information systems for asset valuation. However, the EBA notes the existence of a heterogeneous landscape of banks in terms of their ability to provide accurate data. And while the competent authorities have procedures in place for appointing asset valuation service providers, difficulties remain regarding the low numbers, independence assessment and responsiveness of these providers.
Further information: https://aeur.eu/f/d8e (Original version in French by Mathieu Bion)