EBA notes that resolution colleges have adjusted to a virtual set-up in 2020

17 August 2021

The European Banking Authority (EBA) published today its Annual Report on resolution colleges for 2020. The Report sets out the EBA’s observations on the functioning of colleges during the year and the progress achieved in key areas of resolution planning. The Report reflects on the effects of moving to a virtual format of discussion on foot of the pandemic, and notes that the enforced change was broadly successful and reflected well on contingency planning measures. However, it also highlights areas for improvement to ensure that information exchange and coordination between members remains robust.

Key findings of the Report

Colleges across the EU were required by the pandemic to change from the traditional format of physical meetings to a virtual format. Overall, this was considered to have occurred in a relatively seamless fashion although it was observed that meetings were shorter, less interactive and challenging than previously observed.

The role of colleges in the joint decision-making process generally functioned well with decisions being taken within the prescribed timelines.

Discussions in colleges continued to focus on operational aspects of resolution plans.  There was no evidence of an acceleration or reprioritisation of actions or consideration of alternative resolution strategies in response to the pandemic. The uncertainty of the impact of the pandemic may explain this. Additionally, progress in some areas of resolution planning was less than anticipated, as banks’ resources were devoted to responding to the day-to-day effects of the pandemic. The EBA also noted that the proposals made in the 2019 Report for increased engagement with competent ministries and administrators of deposit guarantee schemes, did not generate detailed discussion.

Areas to be monitored in 2021

For the 2021 cycle of resolution college meetings, the EBA intends to continue to monitor the same issues as set out in the 2019 Report. The passage of time means that as the effects of the pandemic have become clearer, the impact in each area is more open to considered analysis. To recall, the four areas are;

  • 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.

Note to the editors 

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.

 

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Franca Rosa Congiu

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