ESBG opposes full alignment of two regimes
>> See ESBG consultation response
BRUSSELS, 11 September 2020 – ESBG responded recently to the European Banking Authority consultation on own funds and eligible liabilities. Adopted in June 2019, the Bank Recovery and Resolution Directive provided new mandates to the EBA in the area of eligible liabilities, introducing new requirements of full alignment with the own funds’ regime.
In its response submitted to the EBA on 31 August, ESBG strongly argues the scope extension of these amended Regulatory Technical Standards, and also requests a proportionate, flexible and phased-in approach. In particular, the scope of the permission regime for eligible liabilities needs to be reduced and only include instruments used to fulfil minimum requirement for own funds and eligible liabilities (MREL) requirements. ESBG calls for more proportionality in this area, as institutions that would be normally wound up and liquidated in the course of regular insolvency proceedings would be subject to seek prior permission on their eligible liabilities.
For institutions that would be resolved, the scope extension would also be extremely problematic as it would significantly increase the operational burden for issuances which are not necessary to fulfil the MREL requirements.
>> See consultation response