13

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Područje politike
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Regular public hearing with Danièle Nouy, Chair of the Supervisory Board - ECON on 9 November 2017

07-11-2017

This note is prepared in view of a regular public hearing with the Chair of the Supervisory Board of the European Central Bank (ECB) as referred to in Regulation 1024/2013 and the Interinstitutional Agreement between the European Parliament and the ECB. The following issues are addressed in this briefing: the ECB addendum on NPLs, the LCR ratio in case of Banco Popular, the Supervisory Banking Statistics for the second quarter of 2017, recent guidance documents published by the SSM, and recent external ...

This note is prepared in view of a regular public hearing with the Chair of the Supervisory Board of the European Central Bank (ECB) as referred to in Regulation 1024/2013 and the Interinstitutional Agreement between the European Parliament and the ECB. The following issues are addressed in this briefing: the ECB addendum on NPLs, the LCR ratio in case of Banco Popular, the Supervisory Banking Statistics for the second quarter of 2017, recent guidance documents published by the SSM, and recent external briefing papers provided for the ECON Committee.

Regular public hearing with Danièle Nouy, Chair of the Single Supervisory Mechanism - ECON on 19 June 2017

16-06-2017

This note is prepared in view of a regular public hearing with the Chair of the Supervisory Board of the European Central Bank (ECB) as referred to in Regulation 1024/2013 and the Interinstitutional Agreement between the European Parliament and the ECB. The following issues are addressed in this briefing: information in the public domain relating to the resolution of Banco Popular, the ECB’s supervisory expectations for banks relocating to the euro area in the context of Brexit, the Supervisory ...

This note is prepared in view of a regular public hearing with the Chair of the Supervisory Board of the European Central Bank (ECB) as referred to in Regulation 1024/2013 and the Interinstitutional Agreement between the European Parliament and the ECB. The following issues are addressed in this briefing: information in the public domain relating to the resolution of Banco Popular, the ECB’s supervisory expectations for banks relocating to the euro area in the context of Brexit, the Supervisory Banking Statistics for the fourth quarter of 2016, two guidance documents published by the SSM, and a summary of an external briefing paper on banks’ structural changes.

Presentation of the SSM 2016 Annual Report by Danièle Nouy, Chair of the Single Supervisory Mechanism (SSM)

21-03-2017

This note is prepared in view of a regular public hearing as referred to in Regulation 1024/2013 and the Interinstitutional Agreement between the EP and the European Central Bank. Ms Nouy will inter alia present the SSM Annual report 2016. The EP received a copy of that report on a confidential basis, under embargo until Thursday, 23 March 2016, at 9:00 CET. This briefing therefore does not use or refer to any information provided in that Annual report. The following issues are addressed in this ...

This note is prepared in view of a regular public hearing as referred to in Regulation 1024/2013 and the Interinstitutional Agreement between the EP and the European Central Bank. Ms Nouy will inter alia present the SSM Annual report 2016. The EP received a copy of that report on a confidential basis, under embargo until Thursday, 23 March 2016, at 9:00 CET. This briefing therefore does not use or refer to any information provided in that Annual report. The following issues are addressed in this briefing: key priorities for direct supervision in 2017, the key risks road map for 2017, the Supervisory Banking Statistics for the third quarter 2016, recent relevant publications by the SSM, and a summary of external briefing papers on conduct risk.

EBA Stress Test 2016: Some Methodological Issues Raised in the Public Domain

03-11-2016

This note is prepared in advance of the regular hearing with the Chair of the Single Supervisory Mechanism on 9 November 2016 in the competent Committee of the European Parliament. It deals specifically with some methodological issues raised in the public domain in the context of the EBA 2016 stress test. A separate briefing on more general aspects of this exercise (“Bank stress testing: stock taking and challenges”) has been published by EGOV on 22 September 2016.

This note is prepared in advance of the regular hearing with the Chair of the Single Supervisory Mechanism on 9 November 2016 in the competent Committee of the European Parliament. It deals specifically with some methodological issues raised in the public domain in the context of the EBA 2016 stress test. A separate briefing on more general aspects of this exercise (“Bank stress testing: stock taking and challenges”) has been published by EGOV on 22 September 2016.

Low and negative interest rates

23-09-2016

The current very low/negative interest rate environment is the subject of much debate. On one side, the central banks claim that it is not the cause of the problem but the solution, as it should boost investments and spur growth. On the other, a number of Member States claim that the low rates 'expropriate' savers, and financial intermediaries argue that they are putting their tried and tested business models at risk. This analysis introduces interest rates, looks at the causes behind their sustained ...

The current very low/negative interest rate environment is the subject of much debate. On one side, the central banks claim that it is not the cause of the problem but the solution, as it should boost investments and spur growth. On the other, a number of Member States claim that the low rates 'expropriate' savers, and financial intermediaries argue that they are putting their tried and tested business models at risk. This analysis introduces interest rates, looks at the causes behind their sustained decline and presents the current state of the debate.

"Total Assets" versus "Risk Weighted Assets": Does it Matter for MREL Requirements?

04-07-2016

Using a comprehensive sample of European banks by business model, ownership structure and systemic footprint, we calculate MREL requirements based on three hypotheses: i) 18% of RWA; ii) 6.75% of LRE; iii) EBA- RTS. The maximum of i) and ii) TLAC prescription – reveals different requirements across business models/ownership structures not in favour of traditional banking. Variations are reduced somewhat with EBA RTS and an 8% floor. Shocking banks in respect of tail risk events suggests that currently ...

Using a comprehensive sample of European banks by business model, ownership structure and systemic footprint, we calculate MREL requirements based on three hypotheses: i) 18% of RWA; ii) 6.75% of LRE; iii) EBA- RTS. The maximum of i) and ii) TLAC prescription – reveals different requirements across business models/ownership structures not in favour of traditional banking. Variations are reduced somewhat with EBA RTS and an 8% floor. Shocking banks in respect of tail risk events suggests that currently envisaged MREL levels might be insufficient for a smooth resolution for banks.

Vanjski autor

Rym Ayadi and Giovanni Ferri

"Total Assets" versus "Risk Weighted Assets": Does it Matter for MREL Requirements?

04-07-2016

The paper discusses the role of risk weighting in the determination of minimum requirements for eligible bail-in-able liabilities of banks (MREL), i.e. liabilities that are not exempt from the bail-in tool in bank resolution and that can be written down or converted into equity if losses on assets exceed the available equity and such bailing-in is required to re-establish bank solvency so as to provide a basis for maintaining systemically important operations in resolution. The paper begins with ...

The paper discusses the role of risk weighting in the determination of minimum requirements for eligible bail-in-able liabilities of banks (MREL), i.e. liabilities that are not exempt from the bail-in tool in bank resolution and that can be written down or converted into equity if losses on assets exceed the available equity and such bailing-in is required to re-establish bank solvency so as to provide a basis for maintaining systemically important operations in resolution. The paper begins with a general discussion of the reasons for introducing bank resolution as a special procedure outside of insolvency law, of the reasons for having the bail-in tool and of the frictions that may stand in the way of successful and frictionless resolution. This discussion emphasizes the importance of having sufficient bail-in-able liabilities available; in contrast, for large institutions that have access to bond markets, the social costs of such requirements are small (unlike the private costs to the banks themselves). However, neither risk weighted nor total assets provide proper guidance for determining MREL. Risk-weighting suffers from a lack of a proper statistical basis and a certain manipulability. Moreover, the risk weighting that is used for capital regulation is not well suited for determining MREL; whereas capital regulation focuses on the probability of bad results, MREL is concerned with the extent of losses conditional on results being bad. “Total assets” suffer from not truly representing total assets because various rules, e.g. for netting, allow banks to keep certain assets and liabilities off their balance sheets.

Vanjski autor

Martin Hellwig

"Total Assets" versus "Risk Weighted Assets": Does it Matter for MREL Requirements?

04-07-2016

The Bank Recovery and Resolution Directive (BRRD) foresees a minimum requirement for eligible liabilities and own funds (MREL) that banks need to comply with, to ensure the effectiveness of the bail-in tool. A discussion is currently on-going on how MREL should be constructed in practice. In this paper, we look at alternative ways to compute the requirements, showing how the choice of the benchmark metric (between Risk Weighted Assets, Total Assets or Leverage Exposure) can change the allocation ...

The Bank Recovery and Resolution Directive (BRRD) foresees a minimum requirement for eligible liabilities and own funds (MREL) that banks need to comply with, to ensure the effectiveness of the bail-in tool. A discussion is currently on-going on how MREL should be constructed in practice. In this paper, we look at alternative ways to compute the requirements, showing how the choice of the benchmark metric (between Risk Weighted Assets, Total Assets or Leverage Exposure) can change the allocation of requirements across banks. We also review MREL in light of the global effort to ensure future resolvability of banks, highlighting some differences and inconsistencies with the FSB’s Total Loss-Absorption Capacity (TLAC) measure.

Vanjski autor

Bennet Berger, Pia Hüttl and Silvia Merler

"Total Assets" versus "Risk Weighted Assets": Does it Matter for MREL Requirements?

04-07-2016

The bail-in of creditors forms a critical element within the new European bank recovery and resolution mechanism. The bail-in must ensure that indeed creditors instead of taxpayers absorb a bank`s losses under ordinary circumstances. In order to allow an orderly bail-in to happen it is important that banks, among others, have sufficient loss-absorbing capacity. This so-called ‘minimum requirement for own funds and eligible liabilities’ (MREL) is currently based on a combination of indicators that ...

The bail-in of creditors forms a critical element within the new European bank recovery and resolution mechanism. The bail-in must ensure that indeed creditors instead of taxpayers absorb a bank`s losses under ordinary circumstances. In order to allow an orderly bail-in to happen it is important that banks, among others, have sufficient loss-absorbing capacity. This so-called ‘minimum requirement for own funds and eligible liabilities’ (MREL) is currently based on a combination of indicators that are translated into a ratio as a percentage of total liabilities plus own funds. In this paper distribution across banks for the total liabilities plus own funds and the two alternative indicators risk-weighted assets and leverage exposure – are assessed. The results show, based on a sample of 90 euro-area banks subject to direct supervision of the Single Resolution Board, that the difference between leverage exposure and total liabilities plus own funds is limited across the four different variables applied to categorise banks, namely supervisory, size, business models and ownership structures. In turn, the application of a risk-weighted and assets-based ratio substantially changes the distribution, with relatively lower average requirements for systemically relevant, larger, more market-oriented and publicly owned banks.

Vanjski autor

Willem Pieter de Groen

Summary of the External Paper - Estimating the Bridge Financing Needs of the Single Resolution Fund: How Expensive Is It to Resolve a Bank?

24-11-2015

This external paper (authors Willem Pieter De Groen, Daniel Gros, Center for European Policy Studies, November 2015), requested by the ECON Committee, assesses whether further bridge financing could potentially be needed for the Single Resolution Fund during the transitional period from 1 January 2016 to 31 December 2023.

This external paper (authors Willem Pieter De Groen, Daniel Gros, Center for European Policy Studies, November 2015), requested by the ECON Committee, assesses whether further bridge financing could potentially be needed for the Single Resolution Fund during the transitional period from 1 January 2016 to 31 December 2023.

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