BRUSSELS, 11 December 2020 – ESBG recently called on EU authorities to leverage the flexibility inscribed in the current regulatory framework by increasing the share of irrevocable payment commitments (IPC) to 30% of SRF ex-ante contributions for 2021.
Outlined in a letter sent on 24 November to the Single Resolution Board (SRB) and to the European Commission, ESBG noted that while the IPC is set now at 15%, increasing the share of the commitments would provide some flexibility to banks and would allow them to further support the economy in the Covid-19 outbreak context.
ESBG also noted that it is also essential that IPC amounts remain non-deductible from CET1 to allow this measure to be fully effective and in line with level 1 texts.
IPC are defined as an obligation on the part of credit institutions to pay their contributions in the future through a contract signed between the financial arrangement and an institution that opts for the IPC. This is a perpetual and irrevocable obligation secured by low-risks asset as collateral, such as cash, which should be unencumbered and earmarked for exclusive use by the receiving authority.
