News

The EU Single Resolution Board (SRB) has recently published a second report on resolution planning and crisis management for less significant institutions (LSIs). These are banks and other market agesnts under the direct responsibility of national resolution authorities (NRAs, such as the Spanish FROB), while the SRB maintains an oversight role.

The report focuses on the 2023 resolution planning cycle and sets out the progress made by LSIs in terms of resolvability and the build-up of MREL (the “minimum requirement for own funds and eligible liabilities”). This magnitude is the amount that institutions must hold for possible loss absorption and, if necessary, conversion to capital, so as to allow the implementation of the resolution tool determined by the authorities to be the most appropriate.

All LSIs required to comply with their final MREL targets as of 1 January 2024 met their obligations, while some other had extended transitional periods. NRAs continue to phase in and proportionately implement the SRB’s “Expectations for Banks” guidelines, 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.

In 2023-2024, NRAs and the SRB continued to work together to strengthen LSIs crisis preparedness and management through exchanging best practices and developing procedures.

By appointment of FROB, IM Valora is an independent valuer for LSIs in resolution, a position achieved in 2020 through a public tender among the main consulting firms. In 2023, FROB renewed this designation for an additional three-year term.

For more information: https://www.srb.europa.eu/en/content/srb-publishes-second-report-smaller-banks-banking-union