European Savings and Retail Banking Group (ESBG)

An aspect that, in our view, the draft report does not adequately cover is the availability of the respective data needed for each option. According to Delegated Regulation No 2015/63, banks are obliged to report their covered deposits by 31 January to their respective resolution authorities, while the target volume has to be determined by 1 May.

In some Member States, this triggers serious difficulties: while deposit data is readily available within 1 month following the reference date, total liabilities are typically not available until later in the year, when financial statements have been finalised. Setting the target volume based on pre-pre year data would obviously create a significant time lag in these Member States.

Apart from that, the EBA’s draft report correctly states that ‘total liabilities’ is by no means a harmonised definition. The existing differences between nGAAP and IFRS within some Member States and sometimes also across Member States are so substantial that they are capable of preventing a level-playing field when calculating the target level. The ensuing complexity of calculation would be the exact opposite of simple and transparent in some Member States.

As a consequence, and based on the two arguments above, ESBG would like to recommend maintaining covered deposits as the appropriate target level basis for resolution financing arrangements.
As mentioned in our response to Question 1, ESBG would be in favour of maintaining covered deposits as the appropriate target level basis. This is the most popular opinion with ESBG’s membership.

In case the decision will be made that covered deposits are no longer an option for the target level basis, some ESBG members believe that, among the options presented, (c) “total liabilities excluding own funds less covered deposits” could be an alternative and appropriate basis for the target level of the resolution financing arrangement. It seems to be most consistent with the basis of the individual contribution methodology, where own funds and covered deposits are deducted.

However, please allow us once again to point out that an impact study would be very welcome before proceeding further with any of the three options presented above.
We would like to emphasise the following two considerations: firstly, the EBA states that there seems to be no reliable basis for a prognosis of potential future funding needs (para. 24). Secondly, as described above, changing the target level basis would, in our view, involve more complexity and other challenges.

Thus, as also mentioned before, ESBG would be in favour of keeping covered deposits as the basis.
Sebastian Stodulka
E