The European Banking Authority (EBA) has published its Annual Report on resolution colleges for 2019. The Report sets out the EBA’s observations on the efficiency, effectiveness and consistency of the functioning of resolution colleges during the year and the progress achieved in key areas of resolution planning. It also highlights the main areas that the EBA will monitor in 2020, which primarily address responses to the effects of the Covid-19 pandemic. Overall, the Report shows that resolution colleges continue to be an active forum for resolution authorities in the development of resolution plans for cross-border banking groups, where the intensity and quality of cooperation and dialogue has also improved.
Key findings of the Report
In 2019, most of the resolution colleges focussed on the practical steps needed to make their individual plans more operational. In this respect, the Report shows that work should continue in areas such as the operationalisation of the bail in tool, determining and planning for liquidity and funding in resolution, operational continuity arrangements, maintenance of access to financial market infrastructures and introduction of management information capabilities to support resolution.
In addition, the Report highlights that the written arrangements that underpin the functioning of each college should be reviewed to assess their suitability, in particular to reflect the increased prevalence of remote working and the accuracy of emergency contact details.
Finally, the joint decision making process generally functioned well with decisions being take n within the prescribed timelines.
Areas to be monitored in 2020
For the 2020 cycle of resolution college meetings, the EBA intends to monitor discussion and engagement on:
- The credibility and feasibility of the preferred resolution strategy in the current environment and the analysis of alternative resolution strategies;
- The extent to which supervisory authorities, finance ministries and administrators of deposit guarantee schemes are actively involved in consideration of their respective roles;
- Analysis of the suitability of written arrangements underpinning colleges;
- The extent to which colleges undertake reviews of ‘Business Reorganisation Plans’ to assess if changes are required in response to the economic effects of Covid-19.
Resolution colleges are fora for ongoing interactive engagement between the relevant authorities (home and host resolution authorities, supervisors, finance ministries, administrators of deposit guarantee schemes) in order to plan and be ready to execute the effective resolution of cross-border banking groups. Their role is wider and more significant than the simple process of holding physical meetings or conference calls.
Joint decisions on resolution plans, impediments to resolvability and MREL represent core deliverables of the resolution college work as required by the BRRD.
In line with its mandate to promote the effective and consistent functioning of resolution colleges across the EU, the EBA monitored the activities of colleges established for large cross-border banking groups.