Response to consultation to amend the ITS on procedures, forms and templates for resolution planning
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- Template R 02.00 should also have a separate column for instruments listed on exchange platforms, as opposed to including them in a column labeled “others/non-identified”, i.e. with other liabilities, in order to increase transparency, in line with the SRB LDT approach.
- For template R 03.00 any information already provided by the COREP process, such as capital requirements and leverage ratio, would not need to be requested again by resolution-specific templates. This would minimize duplication of reporting. It would also avoid potential inconsistencies: for instance, the COREP Solvency form requires phased-in data, whereas the instructions on p.13 of Annex II refer to fully loaded data (“disregarding all phase-out/phase-in discretions”).
- Template R 04.00 requires the same information as the SRB templates LDT ‘T03.01 – Intragroup liabilities’, ‘T03.02 – Intragroup guarantees received’ and ‘T03.03 – Intragroup guarantees provided’, but in a different form. It could therefore align with the respective SRB templates to avoid duplication. In addition, it is not clear why template R 04.00 has a column asking for the MREL-eligible portion of intra-group liabilities, since intra-group positions do not qualify for MREL.
- The instructions in Annex II could be enhanced in the following respects:
o On p. 19-20, the description related to column 060 of template R 05.02 – ‘Major off- balance sheet counterparties’ appears erroneous, especially in conjunction with the reference to FINREP {F 09.02}. Indeed, the description for column 60 refers to loan commitments, guarantees and other commitments received whereas FINREP {F 09.02} refers to Loan commitments, guarantees and other commitments given, i.e., provided.
o Whether the term ‘entity’, used in many templates, refers to legal entities (i.e. branches not to be reported separately) or other type of entity, and whether that interpretation is the same of all templates or differs. As an example, in template R 06.00 ‘entity’ could refer either to group-level or branch, as branches in different jurisdictions might be subject to different deposit insurance schemes
- The instructions on p.22 of Annex II state that Critical Function assessments for R 07 templates are required for each geographic area in which the group is active. In the interest of proportionality, the scope could be reduced, for example by limiting Critical Function assessments to countries in which "Material Legal Entities" have been identified as part of the group recovery plan.
- The need for template R 07.01 to list Critical Functions on the basis of a defined set of Economic Functions is understandable in light of regulatory efforts to strengthen the comparability of Critical Function assessments across banks. However, a defined set of Economic Functions cannot sufficiently capture the variety of activities of a bank, for instance in capital markets. Template R 07.01 could therefor benefit from a more flexible approach, whereby Economic Functions can be added as per the bank’s business model, and also by a more granular approach to the already defined set, along the model of the equivalent SRB template with multiple further optional Economic (sub-)Functions.
- The various references to FINREP in p.22 of Annex II for the definition of data requirements for template R 07.01 are useful, for example on counterparty sectors or requirements for quantitative data. The instructions in Annex II could clarify that such references to FINREP will be based on group data (in line with the normal basis of FINREP) and not artificially broken down to an entity level.
- The usability and readability of the R 07.01 template could benefit from a standardisation of the information to be completed, for instance through drop-down menus, as opposed to free text. For instance column 060 on the substitutability assessment could be filled with a choice among "High; Medium-High; Medium-Low; Low". Column 070 on the criticality decision could be filled with a choice between "yes" or "no". A further column could be added to allow firms to provide additional comments.
- In the instructions on p.26 of Annex II for template R 07.01, further guidance is needed to fill column 020 on the market share estimations for an Economic Function. For instance whether it should be provided in percentage values or be mapped to category buckets (e.g. "High", "Medium" or "Low", with "High" defined for instance as equal or above 10%).
- In the instructions on p.26 of Annex II for template R 07.01, the current guidance for column 030 on the monetary amount for “Lending” refers to “FINREP, Annexes III and IV, template F 04.04 and Annex V Part 2.35”. However, in future, the form F 04.04 will not be available for sourcing the amount of gross carrying amount for unimpaired and impaired loans and advances to be reported. Instead, for loans at amortised cost, the gross carrying amount will be newly classified into three different stages. Hence, the reference may need to be updated to refer to FINREP form F 04.04.01.
- It would be useful for the template R 07.01 to include an additional column for comments, so that firms can provide the sets of assumptions that they use for the execution of the impact assessment (column 050) and the overall criticality assessment (column 070).
- The instructions on p.22 of Annex II ask for a qualitative judgment about the materiality of entities which are related to Critical Functions (template R 07.02). A quantitative approach, for example based on the distribution of booked assets or liabilities, could also be permitted, in order to strengthen the traceability of this sub-assessment step and allow a more standardised approach on the materiality of an entity for an identified Critical Function.
- For template R 07.03 and in order to keep immaterial entities out of scope, as they do not add value to the group’s resolvability, DB recommends that a materiality threshold for core business line entities is added. The current instructions on p.30 of Annex II (“Name of the Entity as reported in R 01.00 (R-ORG) having or being part of the core business line”) should therefore be changed to "Name of the Entity as reported in R 01.00 (R-ORG) having or and being part of the core business line."
- A mapping of Critical Functions (external view) to core business lines (bank internal view) required by template R 07.04 is sensible and is part of most banks’ annual recovery plan submission. However, the instructions could be enhanced to clarify the expected outcome. The template could provide an overview of which core business line (or non-core business line) performs a critical function. As the key focus in resolution would be to ensure continuity of critical functions, it would be meaningless to collect information on whether a critical function is being a service provider to a core business line.
- An estimation of substitutability in template R 08.00 may not be applicable for all firms or for all agreements, so an “n/a” option should be available. Indeed, banks have undertaken significant efforts to identify critical third party and intragroup agreements required for resolution. They have further revised such agreements to include resolution protections, thereby creating a contractual obligation for continuity in resolution. These protections are in place for those agreements to continue in resolution. Finally, this analysis may only be relevant for non-EU law contracts, because continuity of contracts subject to EU law is ensured by the application of the BRRD provision (Article 68) that establishes that resolution is not per se a reason for termination.
- In template R 09.01 the drop down options do not match the fields.
- The instructions on p.35 et seq. of Annex II could provide more guidance as to whether the FMI Services reported under template R 09.02 should be broken down by product types, services, or both.
- The instructions on p.35 et seq. of Annex II could provide guidance as to whether template R 09.03 is referring to indirect FMI access and whether column 040 should include services by the provider or services by the FMI itself.
- The instructions in on p.40 of Annex II could clarify whether the definition of "critical systems" is intended to cover all systems involved in the front to back flow (including business applications, infrastructure and management information systems) supporting critical functions within group entities. (This answer also refers to question 7 below)."
o implement the time-consuming reporting requirements such as the indirect access (template R 09.03) and
o implement the new EBA FMI templates requirements into the IT system. It is noted that the stabilisation of information requests is critical for the accuracy of regulatory reporting and IT infrastructure.
o Payment system - Large Values (PS - LV);
o Payment system – Retail (PS – Retail);
o (International) Central Securities Depository((I)CSD);
o (I)CSD & Securities Settlement System ((I)CSD-SSS);
o Securities Settlement System without custody (SSS, e.g. T2S);
o Central counterparty for derivatives clearing (CCP - derivatives);
o Central counterparty for securities clearing (CCP – securities);
o Trade Repository (TR).
- The instructions in Annex II could clarify whether column 020 “Entity Name” of template R 10.02 needs to include only material group entities, as the focus seems to be on critical systems supporting critical functions for critical entities. That is because, if the data submission were to cover all entities in the group that make use of group-wide systems (e.g. finance, accounting), the data requirements by this template could become unmanageable, especially for cross-border groups. Even covering only material group entities, the data set from this template would still be very large.
- In template R 10.02 column 020 Entity Name could be renamed “Group Entity Responsible for the System” or instructions to that end could be given in Annex II. It could also be specified whether the column should include all entities or only entities linked to Critical Functions."
Question 1. Would the envisaged remittance date (31 May to be progressively advanced to 31 March) appropriate for all templates? If not, please justify your answer and indicate, template by template, the alternative remittance date you would suggest.
- Deutsche Bank support the comments from the European Banking Federation (EBF) and the Association for Financial Markets in Europe (AFME) that the timing would be challenging due to concurrent annual accounts closing and other reporting to the ECB each March. We would therefore shifting the submission date to May.Question 2. Are there any technical obstacles or inconsistencies in the template ‘R 01.00 - Organisational structure (R-ORG)’ which would prevent you from, or make it disproportionate for you, to report the information required thereby?
- In template R 01.00, column 80 refers to total assets as reported under FINREP, {F 01.01;380,010}. Since FINREP is normally required to be provided at group level, it is unclear what distinguishes this column 80 from column 110 (‘Contribution to consolidated assets’). Indeed, if the intension of column 80 is to report the stand-alone view of assets, then the instructions on p.6 of Annex II should clarify that column 80 may report the stand-alone total assets and thus not follow FINREP.Question 3. Are there any technical obstacles or inconsistencies in the second block of templates (R 02.00 - Liability Structure (R-LIAB), R 03.00 - Own funds (R-OWN), R 04.00 - Intragroup financial interconnections (R-IFC), major counterparties, R 06.00 - Deposit insurance (R-DIS)) which would prevent you or make it disproportionate for you to report the information required thereby?
- Template R 02.00 could be better aligned with the SRB ‘Liability Data Template’ (LDT) ‘T 01.00 – Liability Structure’ in relation to the request to report the total liabilities per counterparty first (including intra-group liabilities and non-EU issuances – columns 010-070) and extract the intra-group and non-EU issuances amounts later (“of which” columns 090-100). The respective SRB template requires reporting of external liabilities per counterparties and, separately, aggregate intra-group liabilities and aggregate non-EU issuances. The EBA suggested template would therefore create unnecessary additional complexity and administrative burden. The reporting of total liabilities per counterparty first would also not add to the resolution planning information, as intra-group liabilities and non-EU issuances do not count towards MREL.- Template R 02.00 should also have a separate column for instruments listed on exchange platforms, as opposed to including them in a column labeled “others/non-identified”, i.e. with other liabilities, in order to increase transparency, in line with the SRB LDT approach.
- For template R 03.00 any information already provided by the COREP process, such as capital requirements and leverage ratio, would not need to be requested again by resolution-specific templates. This would minimize duplication of reporting. It would also avoid potential inconsistencies: for instance, the COREP Solvency form requires phased-in data, whereas the instructions on p.13 of Annex II refer to fully loaded data (“disregarding all phase-out/phase-in discretions”).
- Template R 04.00 requires the same information as the SRB templates LDT ‘T03.01 – Intragroup liabilities’, ‘T03.02 – Intragroup guarantees received’ and ‘T03.03 – Intragroup guarantees provided’, but in a different form. It could therefore align with the respective SRB templates to avoid duplication. In addition, it is not clear why template R 04.00 has a column asking for the MREL-eligible portion of intra-group liabilities, since intra-group positions do not qualify for MREL.
- The instructions in Annex II could be enhanced in the following respects:
o On p. 19-20, the description related to column 060 of template R 05.02 – ‘Major off- balance sheet counterparties’ appears erroneous, especially in conjunction with the reference to FINREP {F 09.02}. Indeed, the description for column 60 refers to loan commitments, guarantees and other commitments received whereas FINREP {F 09.02} refers to Loan commitments, guarantees and other commitments given, i.e., provided.
o Whether the term ‘entity’, used in many templates, refers to legal entities (i.e. branches not to be reported separately) or other type of entity, and whether that interpretation is the same of all templates or differs. As an example, in template R 06.00 ‘entity’ could refer either to group-level or branch, as branches in different jurisdictions might be subject to different deposit insurance schemes
Question 4. Are there any technical obstacles or inconsistencies in the third block of templates (critical functions and core business lines, R 08.00 - Critical services (R-SERV), FMI services, critical information systems) which would prevent you or make it disproportionate for you to report the information required thereby?
- The breakdown of critical function per country instead of only per legal entity in R 07.01 is a welcome improvement. Indeed, some Economic Functions may be assessed as critical in a given country, but some legal entities performing them may be material only if considered as a group and not when considered individually. At the same time, the term geographical area" in the same template is unclear and could be changed to "country". In the interest of transparency, the template could ask whether the geographical region is assigned based on client domicile or booking location.- The instructions on p.22 of Annex II state that Critical Function assessments for R 07 templates are required for each geographic area in which the group is active. In the interest of proportionality, the scope could be reduced, for example by limiting Critical Function assessments to countries in which "Material Legal Entities" have been identified as part of the group recovery plan.
- The need for template R 07.01 to list Critical Functions on the basis of a defined set of Economic Functions is understandable in light of regulatory efforts to strengthen the comparability of Critical Function assessments across banks. However, a defined set of Economic Functions cannot sufficiently capture the variety of activities of a bank, for instance in capital markets. Template R 07.01 could therefor benefit from a more flexible approach, whereby Economic Functions can be added as per the bank’s business model, and also by a more granular approach to the already defined set, along the model of the equivalent SRB template with multiple further optional Economic (sub-)Functions.
- The various references to FINREP in p.22 of Annex II for the definition of data requirements for template R 07.01 are useful, for example on counterparty sectors or requirements for quantitative data. The instructions in Annex II could clarify that such references to FINREP will be based on group data (in line with the normal basis of FINREP) and not artificially broken down to an entity level.
- The usability and readability of the R 07.01 template could benefit from a standardisation of the information to be completed, for instance through drop-down menus, as opposed to free text. For instance column 060 on the substitutability assessment could be filled with a choice among "High; Medium-High; Medium-Low; Low". Column 070 on the criticality decision could be filled with a choice between "yes" or "no". A further column could be added to allow firms to provide additional comments.
- In the instructions on p.26 of Annex II for template R 07.01, further guidance is needed to fill column 020 on the market share estimations for an Economic Function. For instance whether it should be provided in percentage values or be mapped to category buckets (e.g. "High", "Medium" or "Low", with "High" defined for instance as equal or above 10%).
- In the instructions on p.26 of Annex II for template R 07.01, the current guidance for column 030 on the monetary amount for “Lending” refers to “FINREP, Annexes III and IV, template F 04.04 and Annex V Part 2.35”. However, in future, the form F 04.04 will not be available for sourcing the amount of gross carrying amount for unimpaired and impaired loans and advances to be reported. Instead, for loans at amortised cost, the gross carrying amount will be newly classified into three different stages. Hence, the reference may need to be updated to refer to FINREP form F 04.04.01.
- It would be useful for the template R 07.01 to include an additional column for comments, so that firms can provide the sets of assumptions that they use for the execution of the impact assessment (column 050) and the overall criticality assessment (column 070).
- The instructions on p.22 of Annex II ask for a qualitative judgment about the materiality of entities which are related to Critical Functions (template R 07.02). A quantitative approach, for example based on the distribution of booked assets or liabilities, could also be permitted, in order to strengthen the traceability of this sub-assessment step and allow a more standardised approach on the materiality of an entity for an identified Critical Function.
- For template R 07.03 and in order to keep immaterial entities out of scope, as they do not add value to the group’s resolvability, DB recommends that a materiality threshold for core business line entities is added. The current instructions on p.30 of Annex II (“Name of the Entity as reported in R 01.00 (R-ORG) having or being part of the core business line”) should therefore be changed to "Name of the Entity as reported in R 01.00 (R-ORG) having or and being part of the core business line."
- A mapping of Critical Functions (external view) to core business lines (bank internal view) required by template R 07.04 is sensible and is part of most banks’ annual recovery plan submission. However, the instructions could be enhanced to clarify the expected outcome. The template could provide an overview of which core business line (or non-core business line) performs a critical function. As the key focus in resolution would be to ensure continuity of critical functions, it would be meaningless to collect information on whether a critical function is being a service provider to a core business line.
- An estimation of substitutability in template R 08.00 may not be applicable for all firms or for all agreements, so an “n/a” option should be available. Indeed, banks have undertaken significant efforts to identify critical third party and intragroup agreements required for resolution. They have further revised such agreements to include resolution protections, thereby creating a contractual obligation for continuity in resolution. These protections are in place for those agreements to continue in resolution. Finally, this analysis may only be relevant for non-EU law contracts, because continuity of contracts subject to EU law is ensured by the application of the BRRD provision (Article 68) that establishes that resolution is not per se a reason for termination.
- In template R 09.01 the drop down options do not match the fields.
- The instructions on p.35 et seq. of Annex II could provide more guidance as to whether the FMI Services reported under template R 09.02 should be broken down by product types, services, or both.
- The instructions on p.35 et seq. of Annex II could provide guidance as to whether template R 09.03 is referring to indirect FMI access and whether column 040 should include services by the provider or services by the FMI itself.
- The instructions in on p.40 of Annex II could clarify whether the definition of "critical systems" is intended to cover all systems involved in the front to back flow (including business applications, infrastructure and management information systems) supporting critical functions within group entities. (This answer also refers to question 7 below)."
Question 5. The reporting of FMIs and information systems is already required since 2016. In practice are you operationally able to provide such view and do you think it is necessary to set a transition period, for example to progressively build up over the course of three years a full view of the systems within groups?
- The EBA FMI templates partly overlap but are not aligned with the respective SRB templates. The data requirements and the delivery timelines could therefore be more aligned, in order to minimise the administrative burden for firms. Furthermore, the EBA could consider a transition period as per its proposal, in order to:o implement the time-consuming reporting requirements such as the indirect access (template R 09.03) and
o implement the new EBA FMI templates requirements into the IT system. It is noted that the stabilisation of information requests is critical for the accuracy of regulatory reporting and IT infrastructure.
Question 6. The reporting of FMI services and enabling services, in templates R 09.02 and R 09.03 could be facilitated if a list of typical services was included. Can you suggest such list?
- The content of a list of typical services would depend on the intended scope of the template, i.e. product level information or simply a basic field list such as Payment, Clearing, Settlement, Custodial Agent, Correspondent Banking, Market Facilitation (e.g., SWIFT). It would be helpful if the list were based on the respective SRB template and would therefore include:o Payment system - Large Values (PS - LV);
o Payment system – Retail (PS – Retail);
o (International) Central Securities Depository((I)CSD);
o (I)CSD & Securities Settlement System ((I)CSD-SSS);
o Securities Settlement System without custody (SSS, e.g. T2S);
o Central counterparty for derivatives clearing (CCP - derivatives);
o Central counterparty for securities clearing (CCP – securities);
o Trade Repository (TR).
Question 7. Does the nomenclature of information systems in template R 10-01 - Critical Information systems (General information) (R-CIS 1) cover the various types of existing systems, and would it in your view enable the authority to properly identify systems that are key in the performance of critical functions?
- In the context of ensuring continuity of critical functions as a key objective of resolution, the Resolution Authority should be able to assess the risk of non-availability of critical systems and their substitutability. Against this background, the intension behind the proposed four values of the drop-down menu of column 020 “System Type” of template R 10.01 (custom built”, “purchased as-is”, “purchased with modifications", “application/external portal”) is unclear and does not seem to be related to their availability or substitutability. Instead, an option would be to categorise the system types as per replacement effort, for instance “<6 months”; “6 months”; “<2 years” or “>2 years”. Prior versions of this template categorised the systems by principle function (i.e. management information system, risk management, accounting).- The instructions in Annex II could clarify whether column 020 “Entity Name” of template R 10.02 needs to include only material group entities, as the focus seems to be on critical systems supporting critical functions for critical entities. That is because, if the data submission were to cover all entities in the group that make use of group-wide systems (e.g. finance, accounting), the data requirements by this template could become unmanageable, especially for cross-border groups. Even covering only material group entities, the data set from this template would still be very large.
- In template R 10.02 column 020 Entity Name could be renamed “Group Entity Responsible for the System” or instructions to that end could be given in Annex II. It could also be specified whether the column should include all entities or only entities linked to Critical Functions."