SRB to develop new expectations on valuation capabilities

• This will include expectations on valuation data and playbooks.

• Consultation to be carried out in 2025.

The Single Resolution Board is developing and updating its expectations for banks on valuation capabilities.

Bank valuation is a key tool for effective resolutions, with three reports that determine whether the bank is failing or likely to fail (valuation 1), provide input into the use of bail-in and other resolution tools (valuation 2), and to ensure that creditors would not be worse off than if the bank went into insolvency (valuation 3).

The work is part of the SRM’s Vision 2028 strategy, which aims to ensure all resolution strategies can be immediately operational should a bank fail.

The SRB will produce new expectations on valuation capabilities, including: (i) banks under its remit setting up permanent valuation data repositories (ii) an enhanced and streamlined SRB valuation data set taking current regulatory initiatives into account e.g. the Integrated Reporting Framework (IReF) project; (iii) valuation playbooks. In this context, the SRB will collect banks’ feedback on current practices for virtual data rooms.

A specific consultation on valuation capabilities expectations to gather views from the industry and other stakeholders on the approach will be carried out in 2025 as a continuation of and update to the current SRB valuation framework.  

The work will focus on enhancing banks’ capabilities to support the performance of timely and robust valuations, while ensuring that valuers are well equipped with the necessary information to perform their tasks, including valuations 1, 2 and 3.

Current SRB valuation framework

In 2019, the SRB published its Framework for Valuation along with a Q&A document. Then, in December 2020, after a public consultation process, it published the SRB Valuation data set, with supporting documents. 

The new valuation work builds on and expands the current approach, where the focus has been on enhancing banks’ valuation capabilities to retrieve the necessary fields to produce the SRB Valuation data set from their management information systems.