The template has been designed to facilitate the execution of a bail-in decision should a bank fail, or for use in testing exercises; It was produced following a public consultation earlier this year, and banks have 12 to 18 months to put it in place as part of their bail-in preparation.
The SRB has published today the minimum bail-in data template (MBDT) package, which provides an integrated approach for implementing its bail-in operational guidance, by enhancing its definitions and providing a template to ensure structured and standardised data collection. It also includes country-specific fields, as national resolution authorities are responsible for implementing the SRB bail-in decisions at national level.
Bail-in is a key resolution tool in a banking crisis, used to absorb losses and recapitalise failing banks, rather than the burden falling on the taxpayer. It allows the write-down of debt owed by a bank to creditors or its conversion into equity to absorb losses and stabilise the bank. The MBDT template, which includes guidance and a first set of validation rules, ensures that the information necessary for implementing a bail-in decision is available for use in a bank failure, for resolution planning and for testing. It is part of the SRB’s strategic shift to ensuring all resolution tools are fully operational in a crisis.
The SRB conducted a public consultation on the documents between 13 March 2024 and 15 May 2024, and has published a feedback statement on how comments received were addressed.
Progress on resolvability in the Banking Union
a. Minimum requirement for own funds and eligible liabilities (MREL)
All entities under direct SRB remit – the significant institutions - with external and internal targets
which had to comply with their final MREL targets as of 1 January 2024 met their requirements.
This is also true for less-significant institutions, under the direct remit of National Resolution Authorities
(NRAs) that are earmarked for resolution and, thus, have been assigned an MREL target.
The MREL shortfall for significant institutions at Q2.2024 (the most recently available datapoint)
amounted to EUR 3.7 bn (corresponding to 0.05% of total risk weighted assets) down from EUR
4.5bn of Q1.2024. The shortfall is attributed solely to banks with transitional periods going beyond 1
January 20241.
b. Progress in other resolvability dimensions
The large banks in the Union, the so-called significant institutions, are steadily advancing in all
resolvability dimensions, thus building capabilities that can also help in increasing their resilience–
through, for instance, funding diversification, better governance and data management.
The 2023 resolvability assessment report for significant institutions showed that banks had made
substantial progress on the resolvability conditions prioritised since 2021, mainly related to the execution
of the bail-in tool. In the meantime, the SRB prioritised work on capabilities related to liquidity in resolution,
MIS, separability and restructuring. In particular, banks have worked in a timely manner on the estimation
of liquidity needs in resolution and identification of sources of collateral, the generation of the valuation
dataset and preparation for a sale of business and a restructuring post bail-in. Also in 2024, the preliminary
results show further improvement in each of these areas, as the SRB has continued to monitor that banks
are closing the remaining gaps on the Expectations for Banks, and asked banks to increase the testing,
notably in the areas of bail-in execution, liquidity and MIS for valuation.
The SRB published its second less-significant institutions’ (LSIs) report. The report examines key
developments in the sector, details the NRAs’ resolution planning and crisis management activities in 2023-
2024, and explains the SRB’s role in LSI oversight in the Banking Union. It focuses on the 2023 resolution
planning cycle (RPC), and progress made by LSIs in terms of meeting their MREL requirements and
building up their resolvability capabilities. NRAs continue to phase in and proportionately implement the
SRB’s Expectations for Banks, including its resolvability assessment (heatmap) approach. At this stage,
LSIs show good progress on the resolvability capabilities prioritised by their respective NRAs in 2022-2023.
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