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[Introduction]
Good morning to you all, whether here with us in the SRB building in Brussels or joining us online. I’m very happy to be speaking this morning together with our latest Board Member Karen Braun- Munzinger, who is leading our work on Resolution Policy and Cooperation.
We appreciate you taking the time out of what we know is a very busy news agenda. Now, more than ever, your work is so important to us, and that stands whether I’m speaking as the Chair of the EU resolution authority or as a citizen.
This breakfast is well timed as we are living in interesting times just now. Here, I have three dimensions in mind: the new Commission and Parliament, and EU agenda; the progress of bank resolvability and the SRM strategy; and the evolution of the SRB itself.
[I New Commission and Parliament and new agenda]
We are having our conversation this morning in a new institutional landscape for the EU. We have seen a new European Parliament take office, and we are transitioning to a new Commission.
At the SRB, we very much welcome President Von der Leyen’s indications in her mission letter to the Commissioner-designate for Financial Services and the Savings and Investment Union, Maria Luís Albuquerque. [We have also read with interest the recommendations of two recent high-level reports on the Single Market and on European Competitiveness.]
She has asked the Commission-designate to further develop the Banking Union, and a way forward for the European Deposit Insurance Scheme.
We will come back to more specific legislative issues and new legislative mandate, including of course CMDI, a bit later. Let me say that we at the SRB stand fully ready to support work on the Banking Union by the Parliament and the Commission at the technical level, with our data and practical expertise.
At the same time, let me be very clear that we have in place a supervisory and resolution framework that works and that has proven itself. We have the tools and the capacity to deal with any banking crises, should they arise, including for large banks. Our role is to deal with banking failures in an orderly and coordinated way, while protecting financial stability and the taxpayer – and that goes for all banks under our remit, no matter the business model or size.
However, there is no room for complacency. As risks and business models evolve, also our framework should be nurtured to be as complete and as effective as possible.
[IIa. Resolvability and strategy in progress]
We are in a new phase in the development of the SRB’s strategy, and in the level of preparation banks have reached. Overall, we can see that the banking sector has achieved a good level of resilience, as confirmed by our colleagues at the SSM.
At the SRB, we have also reached key milestones that reduce risk and increase resilience. The Single Resolution Fund has reached its target level of just under 80 billion euros, and we have amassed a great deal of experience and experience dealing with resolution cases and with extensive crisis simulation exercises with the national authorities and other stakeholders. We have also added dedicated teams to deal with crisis management and areas like digital transformation.
So, bank crises might seem to be very unlikely as we sit here today, but let’s not forget that only a year ago we saw a wave of failures in the US, followed by the crisis of a global bank - Credit Suisse.
Besides acting when there is a bank crisis, our day-to-day job is to ensure that the banks in our remit are ready in case they run into serious trouble. We work with banks to make them “resolvable”. This work continues at pace and we have made good strides forward.
Our banks have reached a good level in their resolvability capabilities, they are better prepared to face a crisis. This is not only true for large banks – the so-called “significant institutions” – but also for the smaller players in the Union.
All the smaller banks, known as less significant institutions, or LSIs, are now complying with their MREL, the loss absorbing capacity they are required to hold in case of resolution.
This means that both larger and smaller banks, except for a small number in transition, are now fully-MREL compliant. Given the industry’s recent results, this progress, by the way, came with no evident impact on banks profitability!
MREL is not the only resolvability dimension. Banks, large and small, have been steadily working towards meeting all our resolvability conditions. For example, they have improved in their ability to provide data in the case of a resolution and to implement a bail-in.
[IIb. Implementing our strategy, SRM Vision 2028]
The last time I had the pleasure of meeting many of you was last February, when we launched our strategy, SRM Vision 2028. The strategy is designed to ensure that the SRM, and the banks, are ready to respond to any type of risk and crisis scenario.
For the SRB, this means a focus on digital transformation, increased efficiency and transparency.
So, I would like now to give you a quick update on the work we are doing to implement that Vision.
Together with the national resolution authorities, we are streamlining the resolution planning process and the resolution plans to make them more efficient and better focused on the most important issues. We aim to have a streamlined resolution plan in place by next year.
This will allow us to rebalance resources to the most important topics, using a risk-based approach.
This simplification goes hand-in-hand with testing to assess if banks’ capabilities to support resolution will work in practice.
I mentioned that we want to become more transparent. As such, the industry will be consulted on these plans. Banks should receive these tailored multi-year testing plans in autumn 2025.
The SRB is also revising the resolvability assessment methodology. We aim to ensure a consistent ‘steady-state’ approach reflecting future testing exercises and lessons learned from past crisis cases.
The industry will also be consulted on this methodology at the end of the year.
In addition, we are working on deploying the full array of the tools in our framework. This includes on-site inspections - a dedicated team has been set-up and related polices are being developed. We are also working on further developing our substantive impediments procedure policies.
The implementation of the strategy is well under way with a number of practical initiatives and projects. On the other hand, we need to get these projects right and consult with the relevant stakeholders, so the full implementation will naturally take some more time.
[III Changes at the SRB]
Before I hand over to Karen to give an insight into CMDI and other areas, let me mention some changes we are seeing at the organisational level.
As well as welcoming Karen last May, our current Vice-Chair Jan Reinder De Carpentier and two Board Members, Pedro Machado and Jesus Saurina, will finish their mandates at the end of next February.
The European Commission is managing the selection process to appoint new Members, and this is well on track. All going well, we will see some new faces joining us in March 2025.
Our Vision 2028 strategy also focuses on a number of HR priorities, and I would like to mention one of them, which is increasing diversity at the SRB. Since I took up my mandate, the share of women in middle management positions has almost doubled, and we have also set up a dedicated diversity working group to help us identify obstacles and improve the organisation in this area.
[Conclusion]
With that, let me come to a close - we want to have plenty of time for your Questions. Once again, thank you for being here today and all your work to report on and explain financial stability and resolution. And I will now ask Karen to say a few words.
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