SRB publishes second resolvability heat-map

• The SRB publishes its second assessment of banks’ resolvability across the Banking Union
• Good progress made to date on key priorities and in building up loss-absorbing capacity

The Single Resolution Board has today published the results of its annual resolvability assessment, covering the year 2022. The report takes stock of the progress made by banks in being considered resolvable, implementing the SRB Expectations for Banks and building up MREL (the minimum requirement for eligible liabilities and own funds).

Commenting on the Resolvability Assessment, SRB Chair Dominique Laboureix, said “The assessment shows that most banks have continued to make good progress: they have built-up financial resources to withstand severe financial shocks and are on track to meet their targets by the end of this year, which is a significant milestone on the road to financial stability.”

Banks have significantly increased their loss-absorbing and recapitalisation resources, otherwise known as MREL capacity, to ensure that severe losses and recapitalisation needs are borne by shareholders and investors rather than by taxpayers. By the end of 2022, two-thirds of the banks had reached their final MREL target for 2024, including the Combined Buffer Requirement (CBR). As a result, the aggregate MREL shortfall across all SRB banks has decreased by one third compared to 2021, and now amounts to 0.3 percent of the total risk exposure amount (TREA). 

Banks have also further developed their operational processes and started testing their information systems to support the use of these funds in a crisis.

By the end of 2023, banks are expected to close the main remaining gaps, notably on liquidity and funding in resolution, separability and restructuring.

The SRB will review whether material shortcomings remain and take remedial action where needed. 

Looking ahead, given the evolving nature of the risks banks have to face, the resolvability assessment has to adapt in order to provide an adequate response to crisis events at any time.

Banks will need to provide evidence that they update their resolvability capabilities over time. They will be requested to regularly test their capabilities according to a multiannual work programme and to make the necessary adjustments in order to make sure their resolution strategies are flexible enough to respond to a range of crisis scenarios. To this end, the SRB will continue engaging with banks to further operationalise resolution strategies and tools, with particular reference to transfer tools, liquidity in resolution and restructuring.

Resolvability of Banking Union Banks 2022

PDF | 13.53 MB | Publishing date: 19/09/2023 | Decision date: 19/09/2023

Resolvability of Banking Union Banks 2022 - September 2023