On Friday 26 September, the Single Resolution Board (SRB), the European authority responsible for resolving Europe’s major banks, unveiled operational guidance to guide banks when they test their resolvability in the event of failure.
This guidance provides greater visibility of the SRB’s expectations for the three-year testing exercise. The main areas of activity affected by a banking resolution are discussed, including the governance of a financial institution and the valuation of assets. Further guidelines will be presented at a later date on issues relating to the separation of certain banking activities and external communications.
The tests to be carried out by the banks will be proportionate to their size and the nature of their banking activities. They will ensure that these same banks properly self-assess their ability to be resolved, in line with further guidance issued by the SRB this summer (see EUROPE 13696/7).
The result of a consultation process with the industry, the guidelines have been simplified to avoid an excessive administrative burden for European banks, which are anxious to play on a level playing field with their international competitors. Aware of the stakes involved, the European authority notes that in other jurisdictions, the trend is also to make the resolution process operational in the event of a bank failure.
To see the SRB’s guidelines: https://aeur.eu/f/imc (Original version in French by Mathieu Bion)