24 September 2014

European Banking Authority consults on the implementation of resolution tools

The documents aim at facilitating the implementation of resolution tools in the EU banking sector, and in particular at regulating the sale of business tool and the asset separation tool, as well as the transfer of an institution or its assets under any of the resolution tools.

These Guidelines aim at fostering convergent practices among Member States' resolution authorities by giving comprehensive guidance on which circumstances resolution authorities should assess when taking their decisions.

These Guidelines can be divided into two groups and will be consulted upon at two distinct stages. The first one includes the Guidelines on the sale of business tool and the Guidelines on the asset separation tool. Both relate to the implementation of resolution tools against constraints stemming from the EU competition and transparency rules in relation to state aids. They aim at balancing these constraints with the objective of an efficient resolution regime.

More specifically the Guidelines on the sale of business tool specify when authorities may deviate from certain marketing requirements for the sale of the business of an institution under resolution. They provide for the possibility of deviating from standard marketing requirements, if the failure of the institution represents a material threat to financial stability and there is a conflict between the effectiveness of the tool addressing such threat and the marketing requirements. The Guidelines contain a comprehensive list of elements to assess this threat and illustrate potential conflicts with each of the marketing requirements. The Guidelines on the asset separation tool give guidance on assets that may be transferred under the asset separation tool. They suggest three steps in this regard: an assessment of the market situation for the assets concerned, the impact that the liquidation may have on markets and financial stability.

The second public consultation is on the Guidelines on necessary services, which define a minimum list of necessary ‘critical' services that the resolution authority may require from the institution under resolution (i.e. the purchaser after a sale of business, a bridge bank or the transferee after a transfer of assets). These Guidelines take into account the Financial Stability Board (FSB) guidance on critical shared services and as such, they reflect the recent international discussion and commitments of the G20 members for efficient resolutions.

Comments to these consultations can be sent to the EBA by 22 December 2014. A public hearing will then take place at the EBA premises on 28 November 2014 from 9.30 am to 12.00 noon UK time.

Consultation paper on draft GL on necessary services

Consultation paper draft GL on the asset separation tool and on the sale of business tool

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